April Mortgages to lend up to six times sole and joint income

New lender, April Mortgages, which offers a range of 5-15-year fixed rates up to 95% LTV, has today increased its loan-to-income caps.

The Dutch-style lender will lend up to six times sole and joint income to first-time buyers, home movers and like-for-like remortgages, enabling more borrowers to benefit from increased loan amounts.

Skipton Building Society also announced this week that it will provide up to 5.5x loan to income to first-time buyers.

Newspage asked brokers and property market experts for their views on this nascent trend. Some praised it, saying it was the perfect low risk model for homeowners, while others were more critical.

Ben Perks, managing director at Orchard Financial Advisers said, “Are they just kidnapping mortgage borrowers, locking them into long deals and throwing away the key?

“If they have the customer’s best intentions at heart, it’s difficult to see how. Ultra-long fixed rates lend themselves to cautious borrowers who seek certainty.

“But lending them more than they can get anywhere else and providing a long fixed rate just limits the customer’s options to switch to better deals down the line.”

Mark Eaton, COO at April Mortgages said, “Great to hear so many opinions on our introduction of up to 6x LTI.

“We’ve listened hard to brokers’ feedback and have heard loud and clear the need to support affordable lending beyond the traditional 4x LTI.

“With the additional certainty offered by our range of 5-15 years we’re in a position to help and have introduced this new feature to provide brokers with another tool to add to their current ‘advice toolkit’.

“The comments shared by brokers are consistent with the feedback we’ve also received about the need to provide more flexibility to longer term products so I hope the big changes we have introduced to our ERCs, overpayment limits and a reducing rate to reward an improved LTV now enables brokers to have credible conversations with their clients about how to structure their mortgage borrowing.

“Our aim is to continue to innovate based on the feedback you provide and we would love to talk directly with any brokers who want to share ideas.”

Justin Moy, managing director at EHF Mortgages said, “Extending the amount people can borrow can come with its own dangers, especially where the perils of higher rates can compound the pressure on borrowers.

“But when income stretch is coupled with the security of longer term rates, as it is with April Mortgages, it becomes the perfect low risk model for homeowners.

“Traditionally, most borrowers default to a 2-year or 5-year pricing model, so the move to a 10- or 15-year deal may seem like a huge leap of faith, but when priced well this creates the security and peace of mind many borrowers have been asking for. It will be really interesting to see whether borrowers feel comfortable with this approach but it could be a breath of fresh air for some. Ensuring brokers are fairly paid for those longer term recommendations will also break barriers to trade.”