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April Mortgages to lend up to six times sole and joint income

Journalist: Justin Moy, Contributing Editor

ended 23. July 2024

New lender, April Mortgages, which offers a range of 5-15-year fixed rates up to 95% LTV, has today increased its loan-to-income caps.

The Dutch-style lender will lend up to six times sole and joint income to first-time buyers, home movers and like-for-like remortgages, enabling more borrowers to benefit from increased loan amounts.

Skipton Building Society also announced this week that it will provide up to 5.5x loan to income to first-time buyers.

Newspage asked brokers and property market experts for their views on this nascent trend. Some praised it, saying it was the perfect low risk model for homeowners, while others were more critical. Their views are below.

12 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
Extending the amount people can borrow can come with its own dangers, especially where the perils of higher rates can compound the pressure on borrowers. But when income stretch is coupled with the security of longer term rates, as it is with April Mortgages, it becomes the perfect low risk model for homeowners. Traditionally, most borrowers default to a 2-year or 5-year pricing model, so the move to a 10- or 15-year deal may seem like a huge leap of faith, but when priced well this creates the security and peace of mind many borrowers have been asking for. It will be really interesting to see whether borrowers feel comfortable with this approach but it could be a breath of fresh air for some. Ensuring brokers are fairly paid for those longer term recommendations will also break barriers to trade.
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Darryl Dhoffer
Founder at The Mortgage Geezer
April Mortgages are the new sheriff in town. What they're doing does feel like a shot in the arm for the industry. However, longer term fixed rates and increased affordability really do depend on borrowers' circumstances and risk tolerance. Some may like the comfort blanket of longer term fixed rates for peace of mind, while others prefer the flexibility and potentially lower cost of a shorter fix. My questions and potential concerns would surround any changes in borrowers' circumstances and the ability to remortgage to other providers. This may not be optional if borrowing is maxed out to almost six times gross earnings, less commitments, and will incur penalties unless you're moving home, some hefty ones as well, especially if you are on a 15-year fixed rate.
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Ben Perks
Managing Director at Orchard Financial Advisers
Are they just kidnapping mortgage borrowers, locking them into long deals and throwing away the key? If they have the customer's best intentions at heart, it's difficult to see how. Ultra-long fixed rates lend themselves to cautious borrowers who seek certainty. But lending them more than they can get anywhere else and providing a long fixed rate just limits the customer's options to switch to better deals down the line.
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Mark Eaton
COO at April Mortgages
Great to hear so many opinions on our introduction of up to 6x LTI. We’ve listened hard to brokers’ feedback and have heard loud and clear the need to support affordable lending beyond the traditional 4x LTI. With the additional certainty offered by our range of 5-15 years we’re in a position to help and have introduced this new feature to provide brokers with another tool to add to their current ‘advice toolkit’. The comments shared by brokers are consistent with the feedback we’ve also received about the need to provide more flexibility to longer term products so I hope the big changes we have introduced to our ERCs, overpayment limits and a reducing rate to reward an improved LTV now enables brokers to have credible conversations with their clients about how to structure their mortgage borrowing. Our aim is to continue to innovate based on the feedback you provide and we would love to talk directly with any brokers who want to share ideas.
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Dr Konrad Rotthege
Co-founder at Conveyo
The relaxation of loan-to-income caps presents a complex landscape for the housing market. While offering increased accessibility for first-time buyers and stimulating economic activity, it also carries risks of inflated house prices and potential financial strain for borrowers. To ensure market stability, a delicate balance must be struck between supporting homeownership and protecting consumers. Lenders must uphold responsible lending practices, while policymakers must address underlying affordability issues such as limited housing supply and rising living costs.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Great that borrowers will have options that provide higher income multiples, which is something that holds back many from getting on the ladder or making the upsizing move. However, that extra flex comes at a cost of commiting to a long term fixed rate, at what most consider to be the peak of the rate curve. So whilst this will be suitable for some borrowers, it is important to weigh up all the factors. One risk would be, on remortgage, there may not be any other lender willing to lend the balance amount, so borrowers may be trapped.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
April Mortgages is shaking up the lending market with an exciting new extension to its loan-to-income ratio. This progressive move will empower countless buyers, who can benefit from 5- to 15-year fixed rates and up to 95% loan-to-value options, which is perfect for those with smaller deposits. Longer term mortgage rates eliminate stress tests meaning genuine affordability and financial stability is assessed. As many struggle to save large deposits, this initiative maximises buying power, and will enable people to purchase bigger and better homes. April Mortgages is positioning itself as a game-changer in the industry, pushing into a space that very few occupy in the market.
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Rohit Kohli
Director at The Mortgage Stop
Brokers have been seeking innovative products that offer real choices for borrowers, and April Mortgages' long-term fixed rates certainly add to this landscape. While long-term fixes are still a niche, they offer valuable security and borrowing capacity for borrowers, especially those anticipating income growth, such as young professionals. The ability to borrow more with the assurance of stable rates can help buyers afford better properties and avoid the need for frequent moves. As advisers, our role is to thoroughly understand our clients' needs and guide them through the available options to make informed decisions. While long-term fixes provide peace of mind, they are not a one-size-fits-all solution, just as 2-year fixes or trackers may not suit everyone. Each client's situation is unique, and our recommendations must reflect that diversity to ensure the best outcomes.
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Simon Bridgland
Director at Charwin Private Clients
The obsession of changing mortgage deals as often as you change cars can seem like a sport for some. However, most people don’t go about their lives worrying if they have the best deal at any given time. I find that if borrowers feel like they have a great deal at the time they arrange it, then they can put it to the back of their minds. People have enough other stuff to worry about. So, when a lender offers a solution to help achieve that inner peace of forgetting about the mortgage then many would opt for it. While, in theory, generous income multiples could help people achieve a future proof home to last by perhaps jumping a rung on the housing ladder, for most it just means they have a slightly wider choice of lender willing to help them tread water and remortgage the money they already have on a mortgage.
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Dariusz Karpowicz
Director at Albion Financial Advice
It’s a great change of criteria from April, and it's promising to see more lenders like Skipton Building Society increasing loan-to-income caps as well. In the current market, this is one way to help first-time buyers get on the property ladder—since property prices aren’t likely to drop anytime soon. It’s either this or earning more, and let’s face it, the latter is not always feasible. This is a welcome addition, but perhaps lenders could do even more to make home buying accessible for a wider range of people? Maybe it’s time to get a bit more creative!
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
That's a bold move by April Mortgages. At least it lets them differentiate against the rest of the lenders out there. However, when lending is stretched to six times earnings, coupled with fixed rate borrowing at the top of the interest rate cycle, as we are currently at arguably, this will likely put thousands of home buyers and home movers in an overleveraged position. It could end up in a raid scenario for a handful of people who will overzealously max out their borrowing but will fall flat with the slightest of downturn in property prices over the next few years.
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Olivia Harland
Senior Mortgage Consultant at Cleerly Limited
There is definitely a group of people, albeit definitely still a minority, who prefer the security of a longer term fixed rate than the usual 2 to 5 year options. Since interest rates have started dropping over the past few weeks, more people will be conscious of locking in long-term affordability, especially with rent rises for those looking to get onto the property ladder. It comes down to what is the most suitable option for the client based upon their needs and circumstances. If a long term fixed rate is suitable and available, it will be recommended. The more recent cycle has actually been for 5 year fixed rates, rather than 2 years. The same principle applies though: if there is better product availability for long term fixed rates, as well as customer appetite for this, the broker should absolutely discuss these with their clients.