Homeowners receiving larger loan amounts of £34,000 when refinancing their homes with Nationwide
Nationwide, the UK's largest building society, has made several moves to increase borrowing for homeowners in recent months. The latest announcement sees an increase in the borrowing limit for eligible homeowners looking to remortgage, making it easier for them to demonstrate they can borrow enough.
Henry Jordan, Nationwide's director of home, stated that the increased limit could help those looking to remortgage by making it easier for them to demonstrate they can borrow enough. This change is particularly beneficial for homeowners with a strong repayment track record and sufficient income.
Under the new maximum loan calculation, Nationwide now offers enhanced affordability assessments for homeowners with an income of £70,000. This change allows for higher affordability compared to previous limits. For instance, a sole applicant earning £50,000, who previously could borrow up to about £308,900, can now borrow up to £325,000 on a 5- or 10-year fixed product over a 40-year term.
Nationwide generally caps borrowing at about 4.75 times salary for most borrowers but can raise this to 6 times annual income for some, including those meeting enhanced affordability criteria. This means that for a homeowner earning £70,000, the borrowing limit would increase from approximately £332,500 (4.75x) closer to or above £420,000 (6x), depending on individual circumstances and affordability checks.
The increased limit applies to mortgages with a 40-year term and a five-year-plus fixed rate. This change is expected to increase borrowing power by around 5% or more compared to previous limits for those who qualify.
In addition to the remortgage changes, Nationwide has also made it easier for first-time buyers to purchase new-build homes. In June, the society tweaked the rules of its Helping Hand scheme, allowing first-time buyers to buy a new-build home with just a 5% deposit, borrowing up to six times their yearly income. A first-time buyer couple earning a combined £80,000 might be able to borrow up to £480,000 to put towards a new-build house, as long as they have a 5% deposit and can afford the monthly repayments.
Dariusz Karpowicz, director at Albion Financial Advice, stated that the increased limit could offer borrowers a chance to access better deals. This move by Nationwide is expected to benefit many homeowners and first-time buyers looking to secure a mortgage or remortgage their properties.
- This change in borrowing limits by Nationwide could provide financial advice for homeowners seeking to remortgage, as they might access better mortgage deals with increased borrowing power.
- The improved borrowing limit for eligible homeowners means that personal-finance management can be more comfortable, especially for those with a strong repayment track record and sufficient income who are looking to secure new mortgages or remortgage their properties.
- This development in the finance sector, including Nationwide's enhanced affordability assessments, could significantly impact the business operations of property sellers and developers, as more individuals will now have the capability to purchase or re-mortgage properties due to increased borrowing power.
