Clydesdale Bank launches mortgage which allows customers to borrow up to 5.5 times their salary

studentguy

CLYDESDALE Bank will let you borrow up to five and a half times your salary - but only if you're an accountant, barrister, pilot or a doctor.

The new range of mortgages is for "professionals" only, but annoyingly you have to be earning £40,000 a year already and your job has to be one that's on a list put together by the bank.

https://www.thesun.co.uk/money/6802421/clydesdale-bank-mortgage-borrow-five-times-salary/

Interesting, bit miffed though that they have an exclusive list of job titles, I earn more than 40k, but i'm in the software industry, but apparently my job title isn't posh enough for them - feels a tad snobby, but okay...

What do we make of this? Is it wise to allow people to borrow 5.5x their salary?

Amst

Yes, professional people have more to lose than a self-employed window cleaner for example who has stated he will work until the age of 75.

I would imagine it will be restricted on LTV also so the bank can't lose money on a repossession.

studentguy

Amst wrote: »

Yes, professional people have more to lose than a self-employed window cleaner for example who has stated he will work until the age of 75.

I would imagine it will be restricted on LTV also so the bank can't lose money on a repossession.

My argument with the job titles, is that there are professional job titles not in the list, seems a very exclusive list, but hey ho

Amst

studentguy wrote: »

My argument with the job titles, is that there are professional job titles not in the list, seems a very exclusive list, but hey ho

It's the same principle as car insurance, their data will show the types of jobs they want don't default on their payments (or claim if you are referring to insurance) - software engineer may or may not but they won't have the data to show this. Nothing personal.

sal_III

It is daft to limit to specific professions rather than income threshold.

But at some level of income you have much more disposable income you can plow into mortgage so allowing x5.5 for them makes sense to me.

For example:

A) If you earn 40k gross (30,580.88 net) and the bank lend you x4.5 you can get a 180k mortgage and your repayment for 25 year at 2% is £763/m which leaves you with £1785.41 net per month.

If you earn 80k gross (54,415.88 net) and the bank lend you x4.5 you can get a 360k mortgage and the repayment for 25 year at 2% is 1526/m which leaves you with £3008.66 net per month.

C) If you earn 80k gross (54,415.88 net) and the bank lend you x5.5 you can get a 440k mortgage and the repayment for 25 year at 2% is 1865/m which leaves you with £2669.66 net per month.

Who do you think is better suited to service their mortgage exhibit A or exhibit C

Lrimas

I thought mortgages were based on affordability these days (you need to be able to afford interest rates up to x percent) and no longer x times salary?

Thrugelmir

studentguy wrote: »

My argument with the job titles, is that there are professional job titles not in the list, seems a very exclusive list, but hey ho

A job title doesn't make you a professional. Qualifications do.

mrginge

sal_III wrote: »

It is daft to limit to specific professions rather than income threshold.

They aren’t.

They are taking a view that certain professions provide greater long term security and therefore reduced risk of default against their money.

And they are right.

minimike2

Not really news. Already available on the high street with less restrictions.

glosoli

Lrimas wrote: »

I thought mortgages were based on affordability these days (you need to be able to afford interest rates up to x percent) and no longer x times salary?

That is true, it is based on affordability, but nevertheless there are still upper maximum income multiples which regardless of the affordability on paper no-one can go above.

amnblog

Just marketing.

There are other Lenders that could make the same claim or better.