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Abbey to lend FIVE times salary

houseThe Abbey have announced that they will be offering borrowers up to five times their annual salary if they want to buy a house. The usual rule of thumb in the UK is about three and a half, so though it has been possible in the past from mortgage brokers, this is the first time that such a large lender has made such an announcement.

Abbey said it was reacting to surging house prices.

Of course the worry is that people will not be able to afford the repayments and get into debt or have their home repossessed.

But a leading credit counsellor warned that borrowing on this scale meant buyers could be "very stretched".

This offer is not something that is really aimed at the first time buyer as you need to put down a 25% deposit and be earning at least £50,000 which means if you needed five times salary you would be putting down a £60,000 deposit!

Though I wonder if this is the start of a trend among mortgage lenders, where somebody starts, others are sure to go and take up the slack and start offering large multiples on smaller salaries and smaller deposits.

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Five-times-salary mortgage offer

Groundbreaking or gimmick?

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