Start Mortgage is the latest product to be launched in the UK to support buyers with smaller deposits, and Leeds said its aim is to put home ownership within reach of more people.
The mortgage, available to first-time buyers through brokers, combines a high loan-to-value ratio with what Leeds describes as “competitive income requirements”.
As well as offering to lend at five times income – which compares to the benchmark of 4.5 times – the mortgage includes a minimum income of £30,000 and a maximum loan size of £500,000.
For example, a single or joint applicant with a household income of £49,000 and a deposit of £5,000 could borrow £245,000 to buy a house worth £250,000. This represents a 98% loan-to-value ratio.
It is available as a five-year mortgage with a fixed interest rate of 5.65%.
Martez Carton, Mortgage Distribution Director at Leeds Building Society, said: “Affordability remains one of the biggest barriers facing first-time buyers today.
“With our new Start Mortgage program, we combine higher loan-to-value lending with flexible income multiples to better reflect earning potential and housing costs.
“We know that there is no one-size-fits-all approach, which is why we are committed to supporting brokers in finding solutions for their clients.
“We are proud to be able to support aspiring buyers in getting a home of their own and keeping them there by following wise affordability assessments to ensure they do not overwhelm themselves.”
David Hollingsworth, associate director at brokerage L&C Mortgages, said: “The desire to buy a first home remains strong but potential first-time buyers are keenly aware of the challenges that remain.
“Being able to borrow enough and demonstrate affordability while also saving a large deposit is never easy.
“Products like the new Leeds Start Mortgage program provide alternative options for advisers and their clients.
“Combining a small deposit requirement of just £5,000 with a realistic approach to affordability helps address these challenges head on.
“This can make a real difference to aspiring first-time buyers and turn the hope of home ownership into a real possibility.”
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