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Habito ups LTI ratio as house prices continue to rise

Jake Carter

January 7, 2022

mortgage prices

Habito has enhanced the loan-to-income (LTI) criteria for its fixed-for-life Habito One mortgage, with eligible applicants now able to borrow up to seven-times their salary.

To qualify for Habito’s enhanced LTI, applicants must work in specific professional fields, including emergency services, teaching, accountancy, law and surveying, as well as earning a minimum basic salary of £25,000 per annum.

Higher income applicants, who earn a minimum of £75,000 basic salary, are also eligible.

Both single and joint applications will be considered, although just one eligible applicant in a joint application will be accepted for up to seven-times salary, with the other remaining at Habito’s standard five-times.

Rates start from 2.99% without early repayment charges (ERCs), (2.79% with ERC) with the average term for Habito One customers being 25 years.

The increase comes after Habito research found that 78% of Brits believed in the concept of a ‘forever home’ and hoped to be able to get the keys to their dream property aged 41.

However, just one in 10 homeowners (12%) in this age group claimed to be in their ‘forever home’, rising to 26% of those aged 45 to 55.

With average British salaries at £31,285 and house prices reaching £268,000 in 2021, Habito found that the average price of a home has risen to 8.6-times earnings, falling short of the typical mortgage lending cap of 4-4.5-times income.

Due to regional house price disparities, the highest cap is in London, where average homes cost 11.7-times salaries.

The research also found 77% of homeowners in the UK felt they had compromised on the home they had bought, with 53% saying they were limited by what they could borrow for a mortgage, even though they could afford it.

Two-thirds (66%) of homeowners welcomed the idea of having more borrowing power.

Daniel Hegarty, founder and chief executive of Habito, said: “Longer, fixed-rate mortgages mean that customers are completely protected against any threat of fluctuating interest rates, in a way that shorter fixes of 2- or 5-years mortgage deals don’t allow for.

“As a lender that considers every applicant’s case individually, we’re confident that with suitable criteria in place, in the right circumstances, eligible customers can safely and securely boost their borrowing to buy the home that truly suits their needs and their life plans.

“Fixed-for-life mortgages are already popular in other parts of the world, including in the USA and Europe, and we agree with the British government that longer-term fixed rate mortgages can help steady the housing market by providing more certainty to borrowers.

“Our Habito One mortgage allows people to plan their lives, make their next move and pay off their mortgage, without punitive charges.

“We think this is particularly attractive in the rising interest rate environment we all now find ourselves in.

“By extending Habito One’s affordability, buyers could be able to afford a better home than they otherwise would think.

“We believe this will be particularly attractive to those who want to buy a home with lots of future potential, or for people who are expecting pay-rises over their careers, as Habito One enables them to choose to make unlimited overpayments to become mortgage-free sooner.

“As a free, whole of market broker, we can provide our customers with expert, regulated advice on where they can get the best levels of borrowing available to them in the UK – from hundreds of lenders and thousands of mortgage products.

“Now, with Habito One, it means we can go further and offer eligible applicants the best levels of lending in the whole market, should they need it.

“We’re really excited to be able to help people potentially get on the housing ladder a little faster, or in a way that wasn’t available to them before, so they can move into the home that’s right for them, at a time in their life that suits them best.”


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