Previously the maximum first-time buyer loan amount was capped at £300,000 but after brokers fed back that this loan size was too small for London properties the loan amount has been increased to £500,000.
Paul Darwin, head of intermediary sales for Skipton Intermediaries, said: “Small changes like this have big impacts. By increasing the loan size by £200,000 we are able to lend to borrowers living in 13 additional boroughs.”
Skipton’s maximum loan to value for first-time buyers is 90% which meant that the maximum property value a first-time buyer could purchase was £333,333.
But average property prices in boroughs such as Hackney, £435,194, Lambeth, £379,433, Islington, £499,266 and Kingston upon Thames, £338,621, fell beyond the reach of potential first-time buyers using Skipton products.
Feedback from the Skipton’s monthly broker survey highlighted the shortfall prompting the building society to reassess its policy.
Darwin added: “We decided the increased risk in raising the loan amount was mitigated by the level of commitment first-time buyers were prepared to make to their new home.
“If a borrower is prepared to invest in the region of £50,000 into their new home it shows a serious commitment to that property and very unlikely the borrower would walk away from it.”
Working on average house prices for each borough, the amendment in criteria has increased the number of boroughs accessible to Skipton first-time buyers from 15 to 28.
Darwin added: “90% of our mortgage business comes through intermediaries so we were keen to offer more support in that direction. We see this as a positive response to strong demand in that sector.”
