The decision coincides with the launch of Preferred’s product range, which has no income multiples and includes enhanced adverse criteria, including the introduction of a near-prime extra level, discounted rates from 4.06 per cent and a two-year fixed rate starting at 5.14 per cent with no extended tie-in. Its ‘either or’ option has also been extended to its light range.
Roger Taylor, director of sales and marketing at Preferred, said: “A set income multiple formula does not take into consideration an individual’s personal circumstances, such as any existing outgoings. Calculating someone’s ability to repay based on affordability is a much fairer and more accurate representation; the crucial factor is that they can afford to repay the loan.”
Intermediaries can use Preferred’s online affordability calculator to see the maximum their customers can borrow. Taylor said: “Our calculator gives intermediaries a quick but accurate response to the two most important questions: ‘How much can my customer borrow?’ and ‘Can they afford the proposed repayments?’ It provides intermediaries with peace of mind that the application being submitted fits our affordability criteria.”
Sheridan Bradley, mortgage adviser for Lodemead, said: “I think it’s a good idea. Affordability is very useful, as many people, like the self-employed, have income coming in from different sources. The problem then becomes that people have the money, but can’t show where it’s coming from, unlike those on £30-40,000 a year. I’d like to think other companies will follow their example, but it’s impossible to say whether it will become standard.”
Taylor added: “The decision to remove income multiples further reflects Preferred’s flexible approach to underwriting. These enhancements demonstrate our commitment to continually improve our products and the service levels we offer.”
