Standard Life Bank is today calling for mortgage providers to lend on affordability rather than salary multiples.
To lend responsibly, Standard Life Bank says that reviewing an individual’s full financial situation is essential.
Standard Life considers a would-be homeowner’s income and financial commitments rather than purely a multiple of their current salary and the equity in the property (the Loan to Value position).
Anne Gunther, chief executive of Standard Life Bank, says: “We launched our mortgage business based on lending on affordability seven years ago.
“As a responsible lender we believe it makes far more sense to look at a mortgage applicant’s full financial circumstances, including any money they owe, financial commitments and earnings, and to lend based on what they can afford to pay back each month. We would like to see all providers adopting this method of lending as ‘best practice’ and their primary consideration in the decision.”