Maximum income multiples reduced to 4.49 by Barclays
Barclays has cut its loan to income (LTI) for all residential cases that have not yet gone to offer to a maximum of 4.49 times income.
The LTI is the maximum mutiple of the applicant’s income that the lender is prepared to offer.
For borrowers with a loan to value (LTV) above 90 per cent and joint income of £50,000 or less, the new LTI will be even tighter, at four times income.
This limit will also apply to applications where there is a debt to income ratio of 20 per cent or more.
In a message sent to mortgage brokers, the lender said the LTI cut would also affect cases that have already gone to offer, where a material change has occurred that was reported after 28 August.
Barclays listed seven examples which it considered to be a material change in circumstances:
- An increase to the mortgage term
- An increased loan amount
- A change that results in increased outgoings/expenditure, for example adding a commitment or financial dependant
- A reduction to the stated income
- An increase to LTV
- A change of repayment type
- A change of borrower.
A Barclays spokesperson said: “We regularly review our lending policies and today have made some changes to loan-to-income multiples.”
In the note to advisers the lender said: “These changes also apply to any application that has been created and not submitted and to those that have been submitted but are yet to receive an offer.”