Halifax has announced an increase in the minimum mortgage amount for their 2 year and 5 year fixed-rate products, available through selected mortgage intermediaries. Historically, Halifax’s minimum mortgage amount was £25,000, which is considered one of the lowest mortgage amount UK mortgage lenders will offer. However, Halifax Intermediaries has raised this minimum to £100,000 for two- and five-year remortgage products, exclusively available through selected brokers. IN this article, we will explore this new update on the smallest mortgage amount UK lender Halifax will now offer.
What Is The Smallest And Largest Mortgage I Can Get?
What Does The Increase In Halifax’s Minimum Mortgage Amount Mean?
Although Halifax has not provided specific comments on the reasoning behind this change, it is clear that in the current economic climate of rising inflation and living costs, the lender is shifting its focus toward larger loans and potentially wealthier clients. By increasing the smallest mortgage amount they offer, Halifax aims to distance itself from smaller loans and lower-income buyers purchasing cheaper properties. This strategic move is designed to ensure a more stable and affluent client base, thereby securing consistent business and profit in the coming years.
There is a concern that less affluent mortgage clients, who are more impacted by the cost of living increases, may struggle to keep up with mortgage repayments, thereby increasing the lender’s risk. Finance experts across various news outlets agree that similar moves are being observed with other lenders as well.
What Are Other Lenders Doing?
Recently, NatWest also made adjustments to their lending limits, favouring more affluent mortgage borrowers. NatWest now offers mortgages up to five-and-a-half times the annual income for individuals earning more than £75,000 a year. This change clearly aims to attract higher-income clients while discouraging lower-income individuals who might struggle during economic turmoil.
NatWest has also increased the maximum loan size for wealthy borrowers. Those with a 40% deposit can now borrow unlimited amounts, lifting the previous £10m cap. Customers with a 20% or 15% deposit can borrow up to £2.55m, an increase of £1.55m, and those with a 10% deposit can now borrow up to £750,000, an increase of £200,000.
What Do The Mortgage Experts Say?
Oportfolio, a London-based mortgage and protection brokerage, serves clients from diverse backgrounds and income levels. According to Oportfolio, the changes from Halifax and other lenders are both a blessing and a curse. By increasing the minimum mortgage amount UK borrowers can access to £100,000, Halifax has strategically narrowed its client pool, ensuring that their clients earn at least £22,500 a year, which is a significant increase from the previous threshold where clients needed to earn only £5,500.
This move, although not drastically large, will dramatically change Halifax’s business and income structure. It reflects a trend where lenders, by adjusting their criteria, both incentivize wealthier borrowers and inadvertently exclude those on lower incomes.
For example, typical mortgage lending is around 4.5 times the annual income. Hence, someone earning £30,000 a year could potentially borrow £135,000, while someone earning £100,000 a year could borrow £450,000. However, with NatWest’s new criteria, a person earning £75,000 or more can borrow up to 5.5 times their income, significantly widening the gap between high and low earners.
What Is the Minimum Mortgage Amount UK Borrowers Can Get?
The increase in Halifax’s minimum mortgage amount raises the question: what is the smallest mortgage you can get in the UK? Traditionally, Halifax offered one of the lowest mortgage amounts at £25,000. With the new changes, the minimum amount for a mortgage with Halifax is now £100,000, a shift that reflects broader economic conditions and lender strategies. However, there are now plenty of lenders that will offer mortgages of less than £25,000, but it really depends on which lender you go to. This also raises the question of whether or not getting a small mortgager is the right idea, as things like personal loans may be a better option for small short term borrowing. Speaking with a mortgage advisor about the best rout forward is essential.
Speak To A Mortgage Broker Today
If you are interested in learning more about Halifax’s new borrowing criteria or finding out what size mortgage you can get in the UK, contact our friendly advisor team today. We are committed to helping all our clients, regardless of income, secure the best mortgage and protection for their circumstances. Despite the new changes favouring higher earners, there are still many lenders catering to lower-income borrowers, and we can guide you through your options. Feel free to reach out to us to understand more about these changes and how they might affect your mortgage options.
