Southern Pacific Mortgage Limited has ditched income multiples in favour of a debt to income ratio affordability calculation.
The change comes as part of a revamp of all of the three Lehman Brothers-owned mortgage brands in the UK.
The new affordability assessment method applies to all SPML’s products. Brokers can access an affordability calculator from the lender’s website that takes unsecured loans, credit cards and other commitments into account.
The calculator also includes acceptable income sources and the proportion of these that will be used in the calculation.
Lynsey Mitchell, head of sales and development at SPML, says: “Many borrowers are unaware of the DTI ratio method of assessing affordability and still think they can only borrow maximum amounts determined by the traditional income multiples method.
“Affordability calculations are a more flexible and realistic way of determining maximum lending limits as they take into consideration an applicant’s personal circumstances, unlike the traditional income multiples method.
“In many cases, where income multiples would not have produced a loan size sufficient for a borrower’s needs, an affordability calculation allows more flexibility.”
Preferred has unveiled a product range with affordability calculations based on DTI and with no higher lending charges.
London Mortgage Company has launched a range of first charge specialist mortgage products based on number rather than value of County Court judgements. It has also launched a 90% LTV buy-to-let loan with a variable rental cover calculation from 100%.
The products are offered on both full status and self-cert basis up to 90% LTV and are marketed via a network of LMC-approved packagers to which the full product de-tails are available.