Suffolk Building Society (SBS) has become the second mortgage lender of its kind to take prospective home buyers’ rental payment history into account when making loan decisions, following on from the Skipton BS.

SBS says first time buyers will be offered a multiple of 5.49 times their income for those with a record of paying rent on time, to be verified via their bank statements, the first time the building society has ever done this.

This follows on from comments by the Chancellor earlier this year, in which she revealed that a review of Financial Conduct Authority lending rules would take place to enable a prospective buyers’ record of paying rent on time to show they can afford mortgage repayments.

SBS applicants will need to demonstrate 12 months of paying a rental amount that is within 10% of their prospective new monthly mortgage payments.

For example, if a couple pays £1,500 rent per month, they could be considered for a monthly mortgage payment up to £1,650.

“We’re really excited to take rental history into account for the first time, as well as join a very small group of lenders who are offering meaningful support to first time buyers,” says Charlotte Grimshaw, its Head of Intermediaries.

“Many renters have the means to meet sizeable monthly mortgage repayments – often paying more than they would on a mortgage, whilst renting. However, a multitude of factors, such as rising house prices and higher rents has meant customers can often afford to rent or save for a deposit, but rarely both.

“The current situation has put homeownership out of reach for many. The enhanced income multiples, when combined with other affordability-boosting tools, such as five-year fixed rates, or longer terms to reduce monthly payments, should help some of our renters achieve their dream of buying a home. It feels great to be able to support brokers and their customers with a more generous loan to income ratio.”

Initiative

Sheraz Dar, who is CEO of Creditladder.co.uk, which helps tenants record their rental payment history, says: “Following on from the Chancellor’s announcement last month that she was aiming to help first time buyers get on the housing ladder, it’s great to see Suffolk Building Society take the initiative.

“Taking a tenant’s rent payment record into consideration when offering a mortgage will make a significant difference to thousands of tenants every month.

“CreditLadder has helped over 150,000 tenants report their rent payments and one of the most common questions we get asked is “why are my rent payments not taken into account by all lenders when I’m looking to get a mortgage?”

“The number of lenders factoring rent payments into the decisioning process continues to increase and we’re delighted to see such progress.”