5.5X Income Mortgage Available For First Time Buyers

Is it possible to get a 5.5X income mortgage? That is a very common question that I am hearing more and more. Mainly because borrowing money is becoming more difficult. When I first started working in mortgages and property, there were plenty of purchase schemes available for first time buyers to help them get the property and the mortgage they needed. Lender rules and restrictions around borrowing money were also much more relaxed, and if you earned a good salary, had at least a 5% deposit, and didn’t have too many credit commitments to your name, chances were that you would be able to get a sizeable mortgage.

However, with the cost of living and economic uncertainty gripping the UK over the last four years (minimum), lenders have tightened their purse strings, and have made it much more difficult for first time buyers to borrow the loan that they need. But today, Skipton Building Society have announced some new rules to their first time buyer mortgage range. Rules that, in my eyes, will be very beneficial for the ambitious home buyer.

5.5X Income Mortgage For First Time Buyers

This morning, Skipton Building Society circulated a message around mortgage brokers which highlighted the USP’s of their first time buyer mortgage products. The one that stood out to me by far was the announcement that Skipton will now potentially offer up to 5.5X loan to income up to 90% LTV. For the layman what this means is simple, yet brilliant. Skipton will potentially allow a borrower to get a mortgage up to 5.5X their income, as long as they put down a minimum of 10% deposit. Of course this all depends on a case by case basis and borrowers will have to meet all other necessary mortgage criteria around credit score and income levels.

So, let’s have a look at some specific figures to see how this might look for a first time buyer. Buyer A is earning £60,000 a year basic salary. She has no debts, no dependents and is looking to buy a property at £350,000. She has £35,000 deposit from her own savings. Therefore she will need a mortgage of £325,000. With most mortgage lenders, Buyer A will generally be able to borrow around 4.49X her income which would be around £269,400. £55,600 short of what she needs. With the new first time buyer products from Skipton, she could potentially borrow up to 5.5X her income with 10% deposit, which would be £330,000. £5,000 more than she requires. This offer from Skipton is very significant because it not only serves to help thousands of first time buyers struggling with their mortgage affordability, but also signals that trust and willingness to support new buyers is at the forefront of Skipton’s priorities in 2024 moving into 2025.

Up To 95% Mortgage Available For First Time Buyers

Now that we have looked at the most significant USP from Skipton, let’s look at some of the other fantastic pieces of criteria. The next one that stands out is the one that will potentially allow borrowers to put down as little as 5% deposit on a purchase. As I have already mentioned, getting a mortgage is difficult these days, and saving a large enough deposit is even more tricky for first time buyers.

However, whereas many lenders will need a minimum of 10% or even 15% deposit from a buyer, Skipton will allow some buyers to put down as little as 5%, requiring a 95% mortgage which will be calculated at the regular 4.49X income affordability calculation. This is fantastic as it means that new buyers who are unable to save large deposits due to things like expensive rent or lower income and saving abilities can still put down the minimum deposit.

Can You Get A Mortgage For 40 Years?

So you’ve made use of the 5.5X income mortgage criteria from Skipton, but your loan is still falling slightly short of what you need. Or, perhaps you’ve managed to borrow the amount you need, but the repayments quoted are a little more than you hoped to be paying. Luckily, there is another piece of fantastic criteria that Skipton offers for first time buyers. Mortgage terms up to 40 years! (depending on your age).

Yes, Skipton will offer mortgage terms of up to 40 years as long as your have not passed retirement age at the end of the term. Extending your mortgage term can sometimes allow you to borrow a larger mortgage loan, and can reduce your monthly mortgage payment significantly. Which, depending on your mortgage advisors advice, could be very beneficial for new buyers. But you must always understand the risk involved with taking a longer mortgage term. Mojo Mortgages released date recently that extending your mortgage by an extra 10 years costs the average first-time buyer £87,180 in interest incurred. So always weigh up your options with your mortgage advisor.

Free Valuations For Home Purchases

Another significant cost that often gets overlooked by first time buyers is home valuations, an essential part of the purchase process. When buying a house, regardless of how much you have agreed with the seller to purchase the property for, a mortgage lender will need to have an independent valuation carried out to make sure that they are investing in a property that is worth it! The lender will offer a standard valuation service at mortgage application stage, but some people will opt for a more thorough valuation with an independent surveyor. These valuations cost money, and for a standard valuation you may be looking at a couple of hundred pounds, with an independent valuation costing more.

Skipton’s first time buyer mortgage products now offer free standard valuations and discounted home surveys from reputable surveyors Connells. Meaning that first time buyers have one less cost to think about when buying a property, and can put that extra bit of cash towards other essential needs of first home owners.

Speak To A First Time Buyer Mortgage Advisor

My managing director at Oportfolio Mortgages Oliver Whitehead has been helping first time buyers to purchase their own property since the late 1990’s, and he couldn’t be more happy to see these first time buyer benefits emerging from Skipton:

“First time buyers have had it tough. This isn’t a new revelation at all. Even 20 or 30 years ago it was still difficult for someone to get on the property ladder. At least back then you could get 100% mortgages or more recently you could make use of things like the Help To Buy scheme. But these new changes from Skipton are  a breath of fresh air in a particularly first time buyer- phobic mortgage market. It seems that many mortgage lenders are more reluctant to lend to first time buyers…not Skipton though. The introduction of the up to 5.5X income mortgage and also the up to 95% mortgage products will undoubtedly be a great thing for new buyers in the UK.”

If you or anyone you know is looking for a 5.5X income mortgage as a first time buyer, or think that any of the things we have mentioned in this article might benefit you, then please feel free to give our team a call or drop us an email today. We are here to help.