Published: 4 December 2024
By Andy Moody, Chief Commercial Officer
We're about to enter our 150th anniversary year at Leeds Building Society and we're proud to have stuck to our purpose since then of putting home ownership within reach of more people, generation after generation.
We've done that through our mortgage lending but recently there are particular initiatives where we've gone further to address some of the most acute barriers faced by first-time buyers.
A history of helping first-time buyers
We've stopped new lending on second residential homes to allow us to concentrate more of our business towards those yet to get on the property ladder.
We've incorporated the free Experian Boost service into our mortgage lending assessments, giving aspiring home owners the ability to allow a deeper amount of credit history information to be checked and potentially give them a stronger chance of being accepted for a mortgage.
And we've also introduced our series of Reach mortgages for customers whose credit histories wouldn't be eligible for standard mortgages and therefore face being locked out of the market.
Introducing our new Income Plus mortgages
Today we're adding an extra mechanism to help, this time designed to overcome the difficulties of raising a deposit and the high cost of housing.
With our Income Plus mortgages, first-time buyers with a minimum household income of £40,000 may be eligible to borrow up to 5.5 times their annual earnings. That compares to our standard lending where maximum borrowing is capped at a lower level of 4.5 times earnings.
Combined with improvements to assessing how much first-time buyers can afford to repay, based on our lending between March 2024 and August 2024 compared to the new Income Plus criteria we calculate this could lead to on average a maximum of £66,000 more for a first-time buyer.1
We'll lend up to 95% of the cost of the home (known as loan to value or LTV) as part of Income Plus, and that includes new build houses though new build flats will be limited to 85% LTV.
How much a first-time buyer may be able to borrow will depend upon their individual situation. Our mortgages are subject to eligibility, status and financial standing and will go through the affordability process. Applicants must be 18 years or over.
How to find out more about an Income Plus mortgage
The Income Plus mortgage is only available from Leeds Building Society through a mortgage broker.
Intermediaries can give people mortgage advice to guide them through their options.
That's important for all borrowers, but especially first-time buyers who inevitably usually have little to no experience of buying a home.
Overcoming the affordability barrier
The difference between average earnings and average house prices remains at some of the highest levels in history.
That makes it tougher to save for a big enough deposit, as well as being able to borrow the right amount to buy the home you want.
By creating a mortgage which has a higher loan to income level, available with a smaller deposit, we're aiming to bridge that gap in a realistic and robust way.
Income Plus is all about putting home ownership within reach of more people while continuing to lend responsibly. It's what we've been doing for the past 150 years and what we aim to keep doing for at least another 150.
[1]The £66,000 figure is the average in maximum loan size across all LTVs and is a comparison of Income Plus lending with standard residential lending.
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