TSB has become the latest lender to shake up its borrowing criteria to allow some cash-strapped first-time buyers and homeowners to get bigger mortgages. Can you benefit?
The bank has increased its loan-to-income multiple cap from the typical 4.5 to 4.75, but only for applicants that have a salary of £40,000 a year or more.
TSB has also doubled the maximum it is willing to lend on its existing two, three, five and 10-year fixed-rate 90% and 95% mortgages from £250,000 to £500,000 – giving those in pricier areas more choice.
Here, we take a look at how these changes could boost your borrowing power, and provide advice on the steps you can take to find a bigger loan if you don’t qualify.
- For expert advice on which lender is likely to offer the biggest mortgage based on your personal circumstances call Which? Mortgage Advisers on 0800 197 8461.
How much can you borrow from TSB?
The change to TSB’s residential mortgage criteria means all borrowers with a single or joint salary of at least £40,000 will be able to borrow 4.75 times their annual income, rather than the standard of 4.5 times.
The changes mean that a single buyer with no dependents earning £40,000 a year could secure a loan of up to £190,000, rather than £180,000. That’s an extra £10,000 to help fund your house purchase or remortgage.
Alternatively, two applicants with a combined joint income of £100,000 would be able to qualify for a loan of up to £475,000 rather than £450,000 – theoretically giving them £20,000 more to work with.
TSB head of mortgages Nick Smith says: ‘Increasing our loan-to-income cap and maximum loan size on selected products is about being able to give customers more flexibility on their borrowing needs whilst still meeting our affordability criteria.’
Who offers the biggest mortgages?
The amount you can borrow will vary based on each lender’s criteria and what it thinks you can afford to repay. Providers will look at your income and certain outgoings like repayments on existing debts and childcare to determine how much it’ll offer you.
Typically, most lenders will allow you to borrow a maximum of four-and-a-half times your annual income.
However, some lenders are adjusting their criteria to help those struggling to pass tough affordability assessments.
Some banks will now lend up to 5.5 times salary if you are in a certain profession. For example, Clydesdale Bank offers higher income multiples for occupations including barristers, dentists and solicitors.
But even if your job doesn’t make you eligible to borrow more, you may be able to find some lenders will give you a bigger loan if you earn over a certain amount.
Barclays, for example, will offer those with a deposit of 20% and a salary of at least £30,000 a mortgage of up to five times their annual income.
- Find out more: how much can you borrow?
5 tips to boost your borrowing power
Lenders have to abide by strict affordability rules to ensure they only lend an amount that borrowers can afford to repay both now and in the future.
But this can make it tough for those on lower salaries or with small deposits to get onto the property ladder.
If you’re struggling to make the figures add up, here are some tips on boosting your borrowing power.
1. Compare providers
You can use online calculators provided by mortgage lenders to check how much you’re likely to be able to borrow based on your circumstances. This can give you an idea as to which banks might offer the most. Our research shows the amount you’re offered could vary by as much as £22,500 depending on the lender you choose.
2. Reduce outgoings and debt
Reducing your outgoings can help improve your affordability and boost the amount you can borrow. In some cases, paying off some of your credit card debt can increase your borrowing capacity as well.
3. Try a longer term
Taking out a mortgage over a longer period can help you meet the affordability requirements and therefore boost your borrowing limits.
Extending the term from 25 to 30 or even 40 years, for example, can result in much lower monthly repayments and greater affordability.
4. Look at specialist deals
5. Seek personal advice from an expert
A professional mortgage adviser will possess detailed knowledge of lenders and the criteria they’ll use to assess your mortgage application.
A good broker will also be able to survey the whole market and find which lenders will offer you the right loan based on your personal circumstances.
To speak to an expert, call Which? Mortgage Advisers on 0800 197 8461 or fill in the form below for a free callback.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.