The lender is to offer the service across all of its full status applications.
The affordability model will use a calculation which assesses an applicant’s expected net income, living costs, and existing loans, to determine an affordable mortgage repayment amount. A loan size is then calculated based on a given reversionary rate and term.
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Clive Willson, head of sales at Beacon Homeloans, said: “Our move to affordability lending is an extremely positive one, and will allow us to offer realistic loan amounts that are in context with applicants’ monthly outgoings. In a market where the ratio between house prices and salary levels are stretched to say the least, affordability lending can often enable those who are able to meet given monthly repayment costs the extra lending flexibility they need.”
Paul Hunt, head of marketing at Platform, said: “The number of lenders now using affordability calculations is growing and it can offer greater flexibility allowing lenders to more accurately take into account a borrowers ability to repay, which means that for some borrowers greater borrowing is available than would be via the traditional income multiple route.
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“However, it is important that as much transparency regarding the actual calculation is given, so that intermediaries can explain this to borrowers.”
