Mortgage deal offers five times 'key worker' salary
A mortgage broker has launched a home loan which will lend up to five times someone's salary in a bid to help key sector workers get on to the property ladder.
Traditionally lenders will only offer a mortgage of around 3.25 times a person's income.
However, The MarketPlace at Bradford & Bingley said it would lend up to five times someone's annual salary providing they earn at least £20,000.
The group says the increased multiple, which is available to key sector workers and also young professionals, reflects the greater job security of those who worked in the public sector.
It says it's not being irresponsible by advancing such a high sum because the lowest interest rates for more than 40 years meant the mortgage repayments remained affordable.
Ian Darby, group commercial director, says: "The well-documented recent surge in house prices has made it difficult for many first-time buyers to get into the property market.
"Subject to affordability, this product provides the potential for young professionals and key service workers, such as policemen, teachers and nurses, who have been particularly hard hit by recent increases in house prices, to get a foot on the ladder."
The MarketPlace says someone who earned £20,000 and borrowed £100,000 would face monthly repayments of £588.31 during the first year of their loan, which would take up 46% of their monthly income after tax.
This compares with the 61% of net income that someone earning £30,000 would have spent on a £100,000 mortgage in 1988 when interest rates were 12.75%.
The five-year mortgage is charged at a fixed rate, which means borrowers will not face payment hikes if interest rates increase dramatically, as happened during the 1980s. |
