Please find below my affordability tables for this month. Paradigm have been comparing the following thirteen Lenders quarterly since April 2014 using exactly the same scenarios each time. These tables enable you to judge which lenders are leading on affordability in the first time buyer and next time buyer areas.
Scenario 1 – Joint First time buyer at 90% LTV – no dependants. Student loan and credit card debts. Incomes £28,000 and £25000 + car allowance £500
pcm respectively (wishing to borrow £225,000)
Scenario 2 Joint Next time buyer 70%LTV – 2 dependant children, car loan and nursery fees. Incomes £55,000 + £6000 car allowance and £45000 respectively (wishing to borrow £300,000)
*Barclays cap income multiples depending on LTV and overall profile of the case, this could affect the amount your client could borrow- e.g at 90% LTV, loan amount is capped at 4.5 times income.
Since last month...
Comparing this month’s affordability to July’s test we can see that Lenders have moved around the tables in terms of how much they will lend to first time buyers and next time buyers. Barclays came out best on FTB lending whilst Accord are at the top for next time buyers.
We know that Barclays at certain levels of loan to value reduce or cap their income multiples to 4.5 x income so although they appear to be fairly consistent in their affordability model for first time buyers this should be observed and considered before any assumptions made. Nationwide, Halifax and Skipton still remain consistent in their approach to affordability for first time buyers and higher loan to value lending. The star of this month’s stress testing has to be Accord. Accord have consistently produced great products and historically have sourced well, however their service and affordability have not always lived up to the strength of their products. They are looking to turn this around and have certainly proven this with their affordability moves. Watch this space for more news on Accord.
Comparing affordability stress tests over the past year, we can still see that Virgin Money are the most consistent in their approach, they remain at the same lending value each month, Halifax have also remained at a similar level throughout. Accord have significantly improved their affordability, which is evident as we can see they have risen from the bottom of the tables to the top! Nationwide have stayed within the top four lenders for first time buyer for the past year. We can see that Coventry are still a little lower than other lenders and Nationwide has also dropped four places for next time buyers. In terms of next time buyer affordability, both Halifax and Santander have been very consistent in their approach, we can see here that Platform are just moving around them slightly.
Please remember to discuss each individual case that you have with the Lender in question as Lender criteria is subject to change sometimes at very short notice.
Tip of the Week...
Paradigm have recently added Foundation Home Loans to our panel, they are a Buy to Let lender with some great Key USP's, some of which are below:
- No Minimum income
- No minimum period of employment or self employment
- No minimum square footage for studio flats (minimum valuation £75,000)
- No personal proof of income required
- First time landlord products available