Darlington Building Society is offering a new mortgage deal with six times your annual salary if you work in the right industry.
New Professional Mortgage deal from the Darlington Building Society can offer six times your annual salary and is aimed at professionals in certain industries.
The majority of first time buyers, home movers and remortgage buyers are limited to a maximum of about four-and-a-half times your annual salary.
To be considered by the Darlington underwriters you must be in professions such as accountant, actuary, barrister, dentist, engineer, medical doctor, optometrist, pharmacist, solicitor, or vet.
Caroline Darnbrook director of products and marketing said, we wanted to launch this exciting proposition to help professionals get on the housing ladder and move into their own home at a time to suit them.
Regulations limit income multiples
The Bank of England introduced limits on how much people could borrow to prevent risky lending and slow the rise in house price growth.
The following table from the Bank of England shows the percentage of mortgages completed with loan to income multiples of 4 to 4.5 times and 4.5 times or more.
| Year | 4 to 4.5 times | 4.5 times or more |
|---|---|---|
| 2018 | 17.8% | 9.6% |
| 2017 | 16.5% | 9.8% |
| 2016 | 14.8% | 8.8% |
| 2015 | 11.6% | 7.8% |
| 2014 | 11.6% | 9.4% |
| 2013 | 9.7% | 9.7% |
| 2012 | 9.5% | 8.3% |
| 2011 | 8.2% | 6.4% |
| 2010 | 9.0% | 6.3% |
| 2009 | 6.3% | 4.1% |
| 2008 | 8.4% | 5.6% |
The number of mortgages approved at these higher levels have increased significantly with those at 4 to 4.5 times rising from 8.4% a decade ago to 17.8% in 2018.
In October 2014 the Banks Financial Policy Committee it would allow only 15% of new mortgages completed by lenders to have multiples higher than 4.5 times income.
For first time buyers at the limit of the multiples, to have a more expensive property they would need to save a bigger deposit or higher earnings to buy.
The Governor Mark Carney said, this will prevent lending getting too far ahead of income growth and prevent a slide into riskier lending and higher indebtedness that could undermine the economic expansion.
This does not apply to buy-to-let landlords as they must have a 25% deposit and show the rental income can exceed 145% of a notional mortgage interest rate.
Borrowing based on affordability
The amount you can borrow is based on affordability and lenders consider your income and expenses which limits the size of the loan to about 4.5 times your salary.
In contrast, older homeowners are often forced to repay their loan at a certain age and the equity release buyer can agree a lifetime mortgage which does not need to consider their income.
According to UK Finance the average loan to income multiples for first time buyers is 3.69 times to August 2018 borrowing £145,495 and this is up from 3.63 over the year.
For home movers loan to incomes are 3.43 times borrowing £184,400 which is up from 3.40 year-on-year and significantly lower than the 6.0 times offered by the Darlington mortgage.
In London the multiples are higher with 4.07 for first time buyers borrowing £281,500 and 4.01 for home movers borrowing £370,547.
The Professional Mortgage deal is available for a loan to value (LTV) of up to 90% at an interest rate of 3.69% fixed for five years with £619 arrangement fee to home movers and remortgage buyers only.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth for home and garden improvements or reduce inheritance tax owed by your beneficiaries.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, mortgage cost calculators, and property value tracker chart.
