In the pre-credit crunch era, it was not unusual for banks and building societies to agree large mortgages for professional clients. Qualified solicitors, doctors, dentists and other professionals would often benefit from enhanced income multiples, high value mortgages and specialist underwriting because of the nature of their employment.
Since 2008 lenders have tightened criteria for all types of borrower. This has included reducing the maximum ‘loan to value’ that is available as well as reducing income multiples for professionals seeking a large mortgage. However, it is still possible to secure a high value mortgage if you are a professional client…
Mortgage Strategy reports that the East Midlands based Mansfield Building Society is changing its methods of calculating the maximum it will lend to high value mortgage clients. This is designed to allow professionally qualified applicants to borrow more.
Professionals including doctors, lawyers and accountants will now be allowed to borrow up to 4.25 times their gross annual income up to a maximum of 90 per cent loan to value. Other professionals eligible for the scheme include pharmacists, vets, optometrists, solicitors, barristers and dentists.
Mansfield Building Society chief executive Gev Lynott says: “We work hard to provide innovative housing-finance solutions for as many people as possible. Professional applicants warrant special consideration because newly qualified people in particular can expect future substantial increases in income backed by above average job security.
“This means that they typically represent an attractive, lower risk proposition to lenders and the increased ‘purchasing power’ is available across a wide range of mortgage products.”
Islay Robinson, CEO of London mortgage broker and large mortgage specialist Enness Private Clients, welcomed the decision. He said: “The nature of professional clients’ work demands specialist underwriting and some common sense.”
“Considering their job security, the potential for significant future earnings and the demand for their services, enhanced income multiples and underwriting flexibility should be the norm for professional clients, not the exception.”
The Mansfield Building Society has recently become one of 17 new lenders to sign up for the government’s Funding for Lending scheme. Under the scheme, the Bank of England will lend UK Treasury bills to lenders for up to four years for a 0.25 per cent fee per year. This fee increases by 0.25 per cent for each 1 per cent fall in net lending, to a maximum of 1.5 per cent. So, the more loans that are agreed, the cheaper the borrowing.
Mr Robinson, the London mortgage advisor, added: “Many professional clients come to us because they have become frustrated by the ‘tick-box’ mentality of mainstream lenders. High Street banks are frequently risk averse and won’t lend a large mortgage at a high loan to value, compared to private banks, even to a qualified professional. We have helped dozens of barristers, surgeons and accountants secure the large mortgage they need by speaking to a range of lenders who understand the professional market. Many lenders have an appetite to lend to qualified, professional high net worth finance clients with solid incomes and good future earnings prospects.”