UK Lenders Launch Fixed For Life Mortgages: Here How To Qualify For A Mortgage Higher Than 4 Times Your Salary
Towards the end of 2021, UK lender Habito launched its mortgages which allowed homebuyers to borrow up to 7 times their salary. The new initiative has proved popular with first-time homebuyers, as house prices continued to soar. Traditionally, most lenders would allow you to borrow up to 4 and half times your salary. However, with the introduction of the new mortgage program with Habito, many consumers are hopeful they will be able to get on the property ladder sooner rather than later. While the new lender remains one of the few lenders offering such mortgage options, there are other ways borrowers can work to qualify for a higher mortgage limit whether they are buying a home for the first time or looking to finance a second home.
Using A Secured Loan As Collateral
While not all lenders will offer mortgages up to 7 times your salary, there are other ways you can raise the additional borrowing capital like applying for a secured loan and using a personal asset as collateral. Also referred to as a second charge, these loans normally use your home as collateral and are separate from your initial mortgage application.
There are a few stipulations, however. This would only apply to those who are already homeowners and can put up their homes as collateral. It also means you end up having 2 mortgages to pay each month. On the other hand, it could be a better alternative to remortgaging if the remortgaging rate you are being offered means you would end up paying a higher interest rate. Finally, the built-up equity you have in your home will also influence how much you can borrow (along with your income). Most lenders cap their offers for second mortgages to 80 percent of the equity available.
Apply For A Joint Mortgage
Another way to increase your borrowing amount is to apply for a joint mortgage. Applying with someone else means the amount of capital you can borrow also increases. However, both applicants are usually named on the property deed and equally responsible for monthly mortgage payments so it is recommended that you only undertake this option with someone you trust. If you are wondering how much your borrowing capacity might increase with a joint mortgage, a mortgage calculator can give you a good idea. There are also high net worth mortgage exemptions available to individuals who are earning at least £300,00 per annum or hold £3 million in assets.
Remortgage Your Current Property To Raise The Additional Capital
Another option could be remortgaging your home. With lower rates, many are saying it is an ideal time to remortgage and take advantage of the lower costs. It can also be a good way to raise additional capital if you want to buy a second home or investment property but require a mortgage that is 7 times your salary. If you do choose to remortgage, you may incur an early repayment charge if you decide to pay back your mortgage earlier than the agreed terms. Early repayment charges are normally based on the value of your remaining mortgage.
These are just a few ways you can secure a higher value mortgage offer but may not be suitable for everyone. Remember to take the time to carefully review the pros and cons of each option, including fixed for life mortgages before choosing the right one for you.