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Alliance & Leicester: Tailor-made mortgages 'the future'

18 October 2005
Salary-based mortgages are set to be a 'thing of the past', according to mortgage lender Alliance & Leicester.

Alliance & Leicester Mortgages found in a study that a buyer's ability to afford a house should not be based solely on their salary, but on their own individual financial situation, taking into account other disposable income.

Director of mortgages at Alliance & Leicester, Stephen Leonard, said: "Affordability provides a more responsible approach to lending as it considers an applicant’s individual circumstances - those who are debt free will benefit the most.

"Lenders have responded to changing circumstances. The move towards affordability based lending means that more people will get a helping hand onto the property ladder - and homeowners will continue to be able to ‘move up’ as their incomes rise."

By basing mortgage payments on 'affordability' rather than just salary, mortgage lenders would take into account whether the applicant is single or married, has children and how much disposable income they have.

The study found that people have more disposable income now than they did before, meaning that buyers have more money to put aside for mortgage payments.

A survey by revealed this week that the UK housing market is showing signs of recovery after a four-month slowdown.

According to figures from the website, the average price for a home in Wales has risen to £196, 348, half a per cent higher for the first month in four in October.

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