Commenting on the move, Mark Harris, Managing Director at SPF, said: “Many people are keen to own their own home but are put off by house prices that are still high in comparison to salaries, particularly in the big cities. There are ways and means of either fitting into or stretching the standard high street 3.25 multiple which precludes many people from purchasing even a basic first home. Warnings about over-borrowing must always be considered but where outgoings are minimal and wages are reliable and improving, this risk can be reduced.”
The tips are:
1 Get a guarantor: some lenders will allow someone, usually a parent, to guarantee the remainder of a loan outside of a borrowerÃs means;
2 Rent a room out: it is possible to add up to £4,250 (the rental tax allowance) to your income before calculating the multiple;
3 100% loans: despite concerns relating to these loans, a person on a strong and steady income would be in a good position to borrow 100% of the property value;
4 Pool resources: as long as a ‘declaration of trust’ has been drawn up by a solicitor to define varying financial outlays, this is an excellent option in a house-share scenario;
5 Cashback mortgage: this is where the lender rebates a cash lump sum on completion of the mortgage. This can help pay towards legal fees, stamp duty or buying new furniture for example;
6 Housing Associations: offer schemes whereby a borrower can buy a portion of the property and rent the rest, the remainder can be bought at a later date;
7 Means-based loans: these loans are calculated on a buyerÃs incomings and out-goings rather than as a multiple of income;
8 Loans for professionals: employees in industries that remain relatively unaffected by the economy can borrow increased sums e.g. lawyers.
9 Offset mortgages: this works by ‘offsetting’ the money in your current and savings accounts against the amount you have borrowed for your mortgage. Some lenders will include savings accounts from other family members. Instead of earning interest on your savings, you reduce the amount of interest you pay on your mortgage.
10 Higher multiples: some lenders, such as the Halifax, will lend up to 6 times a buyer’s income. This does raise concerns relating to debt burdens, however, where a borrower has no debt and a dependable income, this could be an option.
