Leeds Building Society has extended its Income Plus range to next steppers, giving them access to higher-loan-to-income (LTI) mortgages.
Its Income Plus range allows borrowers to access mortgages at income multiples up to six. The mutual said this would address the “growing gap” between first-time buyer and second-stepper homes, as some are limited by affordability limits linked to household income.
Second-time buyers with a single or joint income of £75,000 or more can borrow up to six times their income, and those with an income of £50,000 or more can borrow up to 5.5 times their income.
Leeds Building Society recently conducted research suggesting 62% of new homeowners felt they had outgrown their homes within three years.
Some 70% of recent first-time buyers said their living circumstances impacted plans to have more children, and 65% felt moving up the property ladder was out of their reach.
Further, analysis from Rightmove found a 52% price gap between the typical first-time buyer and second-stepper home, highlighting the costs needed to upgrade to a bigger property.
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Martese Carton, director of mortgage distribution at Leeds Building Society, said: “We’ve supported members into homeownership for over 150 years, but our research shows that a significant number of recent first-time buyers expect to outgrow their homes far sooner than anticipated.
“The increasing price gap between first and second properties presents a real affordability challenge. Many households need just one additional bedroom, yet the step up in price can be substantial and difficult to bridge under standard income multiples.
“By expanding our Income Plus range, we’re aiming to give next steppers greater borrowing flexibility where it’s affordable to do so, supporting more sustainable home moves and helping keep the housing market flowing.”
David Hollingworth, associate director at L&C Mortgages, added: “Rightly, there’s been a strong focus on first-time buyers having access to more flexible criteria, but there can also be a big step up for next-time buyers, as they look to upsize to a property that will meet their future needs.
“Growing families want to avoid the cost and stress of multiple, stepping-stone house moves and so will want lenders to have the latitude to apply a measured, more accommodating approach to income multiples, where affordability can be met.
“That will help more next steppers to expand their property search, as they look for a place that they can make their forever home.”