Online mortgage lender Habito has announced that it will be introducing a new loan that offers people the chance to borrow as much as seven times what they earn.
Habito has revealed more detailed information about this loan on its website and states that the idea behind it is to enable first-time homebuyers to get onto the property ladder at a time of soaring UK house prices. Loan terms of seven times a person’s annual income will only be available to borrowers who sign up for one of the company’s Habito One fixed-rate loans that have repayment terms of up to 40 years.
Habito has also imposed a number of criteria that borrowers will have to be able to meet to qualify, such as the requirement to pay a deposit of 10% of the property price up front. There are also minimum salary requirements, ranging from £25,000 to £75,000 per year, to be eligible.
Although the loans will be attractive to frustrated first-time homebuyers, some have raised concerns about the level of debt involved during the current economic upheavals.
However, Daniel Hegarty, the founder of Habito, said he was confident that the criteria the company had imposed would ensure the security of those taking out one of the mortgages. He added that such fixed-for-life loans were a standard feature of the market in Europe and the United States.
This is where an advisor with CeMAP training is invaluable for borrowers, as they have the experience to advise whether a loan of this size is suitable.