The news of self-employed borrowers now being eligible for an increased loan-to-income limit from Nationwide is a welcome development for those who are self-employed. This change in policy will make it easier for self-employed individuals to access the funds they need to purchase a home or other large asset.
Previously, self-employed borrowers were limited to a maximum loan-to-income ratio of 4.5 times their annual income. This meant that if a borrower earned £50,000 a year, they could borrow up to £225,000. However, Nationwide has now increased this limit to 5.5 times their annual income. This means that the same borrower could now borrow up to £275,000.
This change in policy is beneficial for self-employed borrowers as it gives them access to more funds and increases their chances of being approved for a loan. It also makes it easier for them to purchase a larger home or other asset that they may not have been able to afford previously.
In addition, Nationwide has also made changes to its affordability criteria for self-employed borrowers. The lender now takes into account the borrower’s average income over the past two years when assessing their loan application. This means that if a borrower’s income has been inconsistent, they may still be eligible for a loan.
Overall, the changes made by Nationwide are good news for self-employed borrowers. The increased loan-to-income limit and changes to the affordability criteria make it easier for self-employed individuals to access the funds they need to purchase a home or other large asset. This is an important step towards making homeownership more accessible to those who are self-employed.