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Original poster

Nationwide to lend first time buyers 5.5 x salary

32 replies

Hummingbird1236 · 20/04/2021 12:25

www.theguardian.com/money/2021/apr/20/nationwide-first-time-buyers-building-society-loans-earnings

Do you think this is a good idea or is it a big risk? I’m a potential first time buyer and whilst this kind of scheme would help me massively, it is a massive amount of money to borrow.

OP posts:
FTEngineerM · 20/04/2021 12:27

Im pretty sure it will just mean that most will have a longer term than they would have otherwise.

Which just means more interest for them.

sharonthefruit · 20/04/2021 12:28

90% LTV max and still subject to affordability assessment.

Devil in the details, as ever.

FTEngineerM · 20/04/2021 12:30

still subject to affordability assessment

Umm.. are we surprised at that? That’s a given, no?

HarrietHardy · 20/04/2021 12:31

Disaster waiting to happen.

lurker101 · 20/04/2021 12:34

I don’t think it’s a bad thing - they’ll still be checking affordability. Given the costs of moving (solicitors/stamp duty/removals/surveys etc) it might help more people get something more long term reducing need to move as much. And - crucially, you don’t have to borrow the maximum the bank will lend you, we thought the repayments on our maximum available were higher than we would like, so borrowed less.

BIoodyStupidJohnson · 20/04/2021 12:34

Feels like one of those things that makes a good headline for a PR exercise, but that relatively few people will actually be eligible for or offered. The amount of arse-covering that Nationwide will have done to protect itself on this will have been immense.

sharonthefruit · 20/04/2021 12:40

@FTEngineerM

still subject to affordability assessment

Umm.. are we surprised at that? That’s a given, no?

Of course but the headline was about offering 5.5 salary without pointing out the finer details Hmm

If you can make the repayments, then it's not really so much of an issue.

As to how many will actually be offered the full 5.5 will remain to be seen.

Original poster
Hummingbird1236 · 20/04/2021 17:55

Hmm yes good point about only a certain number of people being able to obtain these, it will be interesting to see how it pans out

OP posts:
Leafyhouse · 20/04/2021 18:07

I remember when it was a 6x multiple back in the 90's, because property prices were constantly on the up. Nowadays it's because the long term prospect for interest rates is very low. They know what they're doing. I would just lock in the low rate for as long as you can, then you'll be fine.

kirinm · 20/04/2021 19:43

They did do 4.85 x combined salary so it's not that big a leap is it?

PlumpAndDeliciousFatcat · 20/04/2021 20:03

Agree with pp - relatively few people will qualify, I imagine. Remember when HBOS offered a 125% mortgage to people with a 5% deposit in the batshit days of 2006?

Original poster
Hummingbird1236 · 20/04/2021 20:26

Oh wow I never realised they used to do 6 x salary! Crazy! Shock

OP posts:
ConcreteUnderpants · 21/04/2021 14:47

Gosh yes, I had a fair few friends with 110% mortgages around 2000-2005.

Camomila · 21/04/2021 16:52

Ooh that would be ideal if we qualified...I think in a lot of cases it would probably be the same per month as people are paying in rent.

emmathedilemma · 21/04/2021 17:09

I bought my first place in 2003 and a more than 100% mortgage was quite readily available if you wanted money to do renovation works.
5.5x sounds great but I'd love to know what you've live off for the rest of the month unless you had another half with an income that wasn't counted for the mortgage or something like unguaranteed bonuses that they didn't consider.

Paletteofcolour · 21/04/2021 17:13

We've been turned down for mortgages in the past on the grounds of affordability, when the actual rent we'd been paying (and affording) was more than the monthly mortgage payment. We would actually have been better off being lent more. I do wonder if this proposed higher amount will help in cases like that.

AmandaHugenkiss · 21/04/2021 17:22

I got a 95% mortgage on 5x my salary 5 years ago. The deposit was a bigger issue than the repayments to me, my mortgage payments were less than my rent had been!! SE England though.

AmandaHugenkiss · 21/04/2021 17:25

Agree with PP, interest rates are low and if you can lock in for a longer term, and have a secure job, it’s worth it. If you may need to move in the near future or job not secure it’s a risk.

TheThingsWeAdmitOnMN · 21/04/2021 17:29

@HarrietHardy

Disaster waiting to happen.
Why?

It's subject to affordability.

10% Deposit

It's likely to still be considerably less than the rent they're currently paying. .

TheThingsWeAdmitOnMN · 21/04/2021 17:32

@Paletteofcolour

We've been turned down for mortgages in the past on the grounds of affordability, when the actual rent we'd been paying (and affording) was more than the monthly mortgage payment. We would actually have been better off being lent more. I do wonder if this proposed higher amount will help in cases like that.
Exactly.

I think 'affordability' should really look at the rent payments people have been paying (over a decent length of time). If you can
Pay your rent & haven't defaulted on anything else either, it proves it's affordable

TheThingsWeAdmitOnMN · 21/04/2021 17:34

@Hummingbird1236

Oh wow I never realised they used to do 6 x salary! Crazy! Shock
It's not crazy. It doesn't matter what the x salary is, if it's AFFORDABLE.
BestOption · 21/04/2021 17:45

@emmathedilemma

I bought my first place in 2003 and a more than 100% mortgage was quite readily available if you wanted money to do renovation works. 5.5x sounds great but I'd love to know what you've live off for the rest of the month unless you had another half with an income that wasn't counted for the mortgage or something like unguaranteed bonuses that they didn't consider.
You can't take one element and make assumptions about affordability.

Deposit
Length of mortgage.
Etc

I could take that out, living alone, & pay it quite happily. In fact I'd like to be able to get a higher mortgage so I can move to a better property (there's not much between what I own now & what's worth moving 'up' to.). I own a flat, I want to buy a house with a garden and off road parking, in the area I live. There not much comes up, but what does is a big jump in price. The houses priced inbetween are lacking one of those elements, or are less square footage than the flat.

So I'll be pressing the mortgage broker to push the limit as far as he can because I can afford to pay it.

(I know I'm not a FTB , but nationwide will have something for those remortgaging and it makes no difference to the 5.5x salary)

Alarae · 21/04/2021 18:10

There will be stringent criteria no doubt which isn't published so few are likely to actually qualify.

Similar to the 6x mortgages in the last couple of years for individuals in certain professions who will gain a large salary bump on qualification (I.e. accountants).

InTheNightWeWillWish · 21/04/2021 18:23

They’ll still run an affordability check on you and stress test you with a higher interest rate, if you don’t meet that, they won’t lend to you.

Also just because they will lend that much, it doesn’t mean you will be comfortable using that much. The bigger the mortgage, the bigger the mortgage payments. We stayed well below the maximum they would offer us because we felt the mortgage payment associated with that level of mortgage wasn’t affordable to us. So we worked out our own affordability before we applied for a mortgage and applied for about 3x times our combined salary at that point. We had no problem passing the affordability checks.

LemonadeFromLemons · 22/04/2021 09:41

OP, will it help you massively though? Or will it just mean private sellers and builders put their house prices up? Another Help to Sell scheme I think.