Could Coventry Building Society’s new 6.5 times income mortgage criteria help more first-time buyers get onto the property ladder in Plymouth?

Buying your first home can feel increasingly difficult. With property prices, mortgage rates, deposits and affordability all playing a part, many first-time buyers find that their income doesn’t stretch far enough to buy the home they want.

However, there has been some positive news for eligible first-time buyers.

Coventry Building Society has increased its maximum borrowing to up to 6.5 times income for eligible first-time buyers.

For some buyers, this could make a significant difference to their borrowing capacity and potentially open up opportunities that previously weren’t available.

At Stuart Ash Mortgage Services in Plymouth, we understand how important it is for first-time buyers to understand exactly what changes like this could mean for them.

In this guide, we’ll explain Coventry Building Society’s new 6.5 times income criteria, who may be eligible, how the figures work and what Plymouth first-time buyers should consider before applying.

What does 6.5 times income actually mean?

Quite simply, a mortgage based on 6.5 times income means that an eligible applicant could potentially borrow up to 6.5 times their qualifying income.

For example:

£40,000 income × 6.5 = £260,000 potential mortgage

Or:

£50,000 combined income × 6.5 = £325,000 potential mortgage

However, it’s extremely important to understand that 6.5 times income is a maximum, not a guarantee of how much you can borrow.

The amount a lender is prepared to offer will depend on a range of factors, including affordability, credit commitments, the property, deposit, mortgage term and the lender’s full lending criteria.

Coventry Building Society states that all applications are subject to its lending checks. (Coventry for Intermediaries⁠)

Why is this important for first-time buyers?

One of the biggest challenges facing first-time buyers is the gap between their income and the price of the property they want to purchase.

A buyer might have a good deposit and a strong credit history but still find that a traditional income multiple doesn’t provide enough borrowing to purchase a suitable home.

Increasing the potential income multiple can therefore make a difference.

For example, a buyer earning £40,000 might theoretically have:

4.5 times income = £180,000

compared with:

6.5 times income = £260,000

That’s a potential difference of £80,000 in borrowing capacity.

However, this doesn’t mean that every applicant earning £40,000 will be able to borrow £260,000.

Affordability assessments still apply.

Can first-time buyers borrow up to 95% of the property value?

Yes, Coventry Building Society’s current first-time buyer information states that eligible first-time buyers can borrow up to 95% LTV, meaning a deposit of as little as 5% may be possible. (Coventry for Intermediaries⁠)

This could be particularly significant for buyers who have a strong income but are struggling to build a large deposit.

For example, on a property priced at £250,000:

5% deposit = £12,500

95% mortgage = £237,500

The availability of a 95% mortgage doesn’t mean that this will necessarily be the most suitable option for every buyer. A larger deposit can sometimes provide access to different mortgage rates and potentially lower monthly payments.

That’s why it’s important to look at the whole mortgage rather than simply focusing on the maximum amount you can borrow.

What are Coventry Building Society’s eligibility requirements?

The 6.5 times income proposition is not available to everyone.

According to Coventry Building Society’s current intermediary information, the criteria include:

• Up to 6.5 times income for eligible first-time buyers.
• Up to 95% LTV.
• Minimum income of £30,000 for a sole applicant.
• Minimum £50,000 combined income for joint applicants.
• No applicant can be self-employed under this particular proposition.
• Applications remain subject to the lender’s affordability and lending checks. (Coventry for Intermediaries⁠)

 

This is why speaking to a mortgage adviser before assuming that you qualify is important.

What could this mean for first-time buyers in Plymouth?

For first-time buyers in Plymouth, the change could be particularly interesting.

Many buyers aren’t necessarily struggling because they don’t have a deposit. Instead, they may find that their income limits the size of mortgage they can obtain.

The ability to potentially borrow at a higher income multiple could give some buyers more purchasing power.

For example, a couple with a combined income of £60,000 could theoretically have a maximum income-based borrowing figure of:

£60,000 × 6.5 = £390,000

Again, this is purely an illustration of the income multiple.

It is not a mortgage offer and does not mean that a £390,000 mortgage would be affordable or available to that couple.

The lender’s affordability assessment will determine the actual borrowing available.

A bigger mortgage doesn’t necessarily mean a better mortgage

It’s easy to see a 6.5 times income mortgage and immediately think that borrowing more must be better.

It isn’t necessarily.

A larger mortgage means a larger amount of debt.

This could result in:

• Higher monthly mortgage payments.
• More interest being paid over the mortgage term.
• Greater exposure to future interest rate changes when your initial deal ends.
• Less financial flexibility if your circumstances change.

Your mortgage should therefore be based on what you can comfortably and sustainably afford, rather than simply the maximum a lender is prepared to offer.

What if I only have a 5% deposit?

The good news is that eligible Coventry Building Society first-time buyers can potentially borrow up to 95% LTV.

That means a 5% deposit could potentially be enough to purchase a property, subject to the lender’s criteria.

For example:

£200,000 property

5% deposit = £10,000

Mortgage = £190,000

Or:

£300,000 property

5% deposit = £15,000

Mortgage = £285,000

The important thing to remember is that you’ll also need to budget for the other costs associated with buying a property.

These could include solicitor’s fees, mortgage-related costs, surveys, moving costs and other expenses.

What if I’m self-employed?

This is an important point.

Coventry Building Society’s current criteria for this 6.5 times income first-time buyer proposition state that no applicant can be self-employed. (Coventry for Intermediaries⁠)

That doesn’t necessarily mean self-employed first-time buyers can’t obtain a mortgage.

There are many mortgage lenders and products available to self-employed applicants.

However, this particular Coventry Building Society proposition may not be suitable for you.

This is one of the reasons why speaking to an mortgage adviser can be useful.

Thinking of buying your first home in Plymouth?

If you’re a first-time buyer in Plymouth, Plymstock, Ivybridge, Saltash, Tavistock, Kingsbridge or South East Cornwall, Coventry Building Society’s new 6.5 times income criteria could be worth investigating if you meet the eligibility requirements.

If you’re considering buying your first home and want to know how much you may be able to borrow, Stuart Ash Mortgage Services in Plymouth can help you explore your mortgage options.

We can help you understand the numbers, the potential costs and the mortgage options available based on your circumstances.

Contact – Stuart Ash – Mortgage Services

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