Announced this week, eligible applicants will be able to borrow up to seven times their salary and enjoy more borrowing power than ever before.

The boost comes as Habito’s research finds that more than three quarters (78%) of Britons believe in the concept of a ‘forever home’ and hope to be able to get the keys to their dream property aged 41.

Yet in reality, just one in 10 homeowners (12%) in this age group claims to be in their ‘forever home’, rising to just a quarter (26%) of those aged 45-55.

With average British salaries now £31,285 and house prices hitting £268,000 this year, the average price of a home has rocketed to 8.6x earnings, falling way short of the typical mortgage lending cap of 4-4.5x income.
Due to regional house price disparities, this situation is much worse in some areas than others, for example, in London where average homes cost 11.7x salaries.

Indeed, Habito’s findings show that 4 in 5 homeowners (77%) in the UK, compromised on the home they’d bought, with more than half (53%) saying they were limited by what they could borrow for a mortgage, even though they could afford it.

Two thirds (66%) of homeowners welcomed the idea of more borrowing power, provided of course that all affordability checks had been put in place.

Habito’s research found that a ‘forever home’ in Britain today has just over three bedrooms, two receptions rooms, a large garden, a dining room, a driveway and costs £380,000, rising to £550,000 in London. That budget could buy this 4-bed detached modern home in Nottingham, a three-bed terraced in Palmer’s Green, North London, or this a 5-bed detached home in Scotland.

To qualify for Habito’s enhanced affordability, applicants must be trained in specific professional fields, including; emergency services, teachers, accountants, lawyers, surveyors and vets and earn a minimum basic salary of £25,000 per annum.

Higher-income earners who earn a minimum of £75,000 basic salary are also eligible. Both single and joint applications will be considered, although just one eligible applicant in a joint application will be accepted for up to seven times salary, with the other a Habito’s standard five times. Rates start from 2.99% without ERC, (2.79% with ERC) with the average term for Habito One customers being 25 years.

Daniel Hegarty, founder and CEO of Habito, said: “Longer, fixed-rate mortgages mean that customers are completely protected against any threat of fluctuating interest rates, in a way that shorter fixes of 2 or 5 years mortgage deals don’t allow for. As a lender that considers every applicant’s case individually, we’re confident that with suitable criteria in place, in the right circumstances, eligible customers can safely and securely boost their borrowing to buy the home that truly suits their needs and their life plans.”

“Fixed-for-life mortgages are already popular in other parts of the world, including in the USA and Europe, and we agree with the British Government that longer-term fixed rate mortgages can help steady the housing market by providing more certainty to borrowers. Our Habito One mortgage allows people to plan their lives, make their next move and pay off their mortgage, without punitive charges. We think this is particularly attractive in the rising interest rate environment we all now find ourselves in.”

Deposit sizes have had to balloon to make up this loan-to-income lending shortfall, with the Bank of Mum, Dad and Grandparents in the UK lending £9.8 billion in 2021, and being part of half (49%) of all first time buyer transactions. It’s also changed the ways in which people buy, with many being unable to afford a home in their city, without buying with someone else. For a solo buyer, earning £31,285, to buy a home worth £268,000, borrowing at 4.5x their salary, a deposit of £114,761 (44% of the property value) would be needed, an impossibility for many.

Mr Hegarty continued: “By extending Habito One’s affordability, buyers could be able to afford a better home than they otherwise would think. We believe this will be particularly attractive to those who want to buy a home with lots of future potential, or for people who are expecting pay-rises over their careers, as Habito One enables them to choose to make unlimited overpayments to become mortgage-free sooner.”

“As a free, whole of market broker, we can provide our customers with expert, regulated advice on where they can get the best levels of borrowing available to them in the UK - from hundreds of lenders and thousands of mortgage products. Now, with Habito One, it means we can go further and offer eligible applicants the best levels of lending in the whole market, should they need it. We’re really excited to be able to help people potentially get on the housing ladder a little faster, or in a way that wasn’t available to them before, so they can move into the home that’s right for them, at a time in their life that suits them best.”

In the study into homeowner attitudes, Habito’s research found that 41% of respondents felt the continual rise of house prices and stagnation of salaries was the biggest issue facing the housing market, followed by the size of deposit required by first time buyers to get on the ladder (38%).