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With house prices continuing to rise, it is becoming increasingly difficult for first-time buyers to get onto the property ladder. Regular mortgage income multipliers often are not enough to get buyers onto the ladder. Nationwide offers a fairly unique proposition that can help boost affordability for first-time buyers.
The Challenge
Most lenders typically offer 4.5 times income or up to 5 times income. Those with smaller deposits, such as 5-10%, are usually limited to 4.5 times income.
Example:
- Salary: £50,000
- Deposit: 10% (£25,000 for a £250,000 property)
Using the standard 4.5 times income multiplier:
- Maximum Mortgage: 4.5 x £50,000 = £225,000
- Total Budget: £225,000 (loan) + £25,000 (deposit) = £250,000
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The Helping Hand
With Nationwide’s Helping Hand mortgage, you can get up to 5.5 times your income if you meet their criteria and affordability checks.
Example:
- Salary: £50,000
- Deposit: 10% (£27,500 for a £275,000 property)
Using the 5.5 times income multiplier:
- Maximum Mortgage: 5.5 x £50,000 = £275,000
- Total Budget: £275,000 (loan) + £27,500 (deposit) = £302,500
Nationwide Helping Hand Eligibility
- Deposit: At least 5-10%
- Fixed Rate: Must choose a 5-10 year fixed rate
- Employment: Cannot be self-employed
- Government Schemes: Not eligible if using a government scheme
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Benefits of the Helping Hand Mortgage
- Higher Income Multiple: Up to 5.5 times income, up from the usual 4.5 times for many first-time buyers
- Cashback: £500 cashback incentive
- Competitive Rates: Attractive interest rates
- Rate Reservation: Allows you to reserve a rate on an Agreement in Principle (AIP), whereas most lenders only allow this on a full application
- Borrowing Term: Can borrow up to 40 years depending on age and retirement plans, which helps manage your budget and keep monthly costs down
- Property Types: Available for both houses and flats
Things to consider
- Fixed Rate Commitment: You need to commit to a 5-year fixed rate. Ensure this is suitable for you.
- Affordability: Ensure you are comfortable with the payments and do not borrow more than you can afford.
- Product Fees: Compare products with and without fees to calculate the cheapest cost over the benefit period.
Alternatives to Nationwide’s Helping Hand Mortgage
While Nationwide’s Helping Hand mortgage offers up to 5.5 times your income, there are other alternatives for first-time buyers who might not meet its criteria or are looking for different options. Here are some viable alternatives:
Other High-Income Multiple Mortgages
Some lenders offer higher income multiples, but typically require higher incomes and larger deposits. These lenders might offer up to 5.5 times your income under certain conditions:
Shared Ownership
Shared ownership schemes allow you to buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share. This reduces the amount you need to borrow.
- Advantages: Lower deposit requirements, reduced mortgage size, and the ability to buy more shares in the future (staircasing).
- Considerations: You’ll need to pay rent on the remaining share, which can increase your monthly costs.
First Homes Scheme
The First Homes scheme offers new-build homes at a discount (minimum of 30%) to first-time buyers and key workers. The discount is maintained for future sales to keep homes affordable.
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Guarantor Mortgages
Guarantor mortgages involve a family member or friend guaranteeing the mortgage. This can increase the amount you can borrow and may require little to no deposit.
Joint Borrower, Sole Proprietor Mortgages
These mortgages allow a family member or friend to join the mortgage application without being named on the property’s title deeds. This increases the borrowing capacity based on combined incomes.
What are Nationwide’s helping hand mortgage rates?
When applying for a loan, factors like the loan-to-value ratio, fee structure, and current interest rates are crucial. The loan-to-value ratio affects how much you can borrow and might influence your interest rate. Fees can include things like origination and application costs. Current interest rates will impact your monthly payments. Choosing between a 5-year and 10-year fixed rate depends on whether you want a shorter or longer period of fixed payments, with 10-year rates usually being a bit higher. All these elements together determine the total cost and terms of your loan.
What documents are required?
- Identification (ID): A valid photo ID such as a passport or driver’s licence.
- Proof of address: Recent utility bills, bank statements, or a rental agreement to verify your current address.
- Last 3 months of payslips: To demonstrate your regular income, plus any additional payslips if you have other sources of income.
- Proof of deposit: Documentation showing you have the necessary funds for the down payment.
- Last 3 months of bank statements: To provide a comprehensive view of your financial stability and transactions.
These documents help Nationwide assess your financial situation and eligibility for the mortgage.
How Can Strive Help?
At Strive, we can help you by comparing all available loan deals, including those from Nationwide and other lenders, to find the best option for you. We handle the entire process on your behalf, including arranging the loan, managing all the paperwork, and liaising with solicitors, surveyors, and estate agents. From start to finish, we’re here to make the process as smooth and stress-free as possible.
Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.
For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
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