A journalist at Thisismoney / Mail Online is working on a piece on highly-leveraged mortgages, as Nationwide has just announced that it will be offering its 'Helping Hand' product (which lends 5.5x salary if the borrower signs up to at least a five-year fix) to those with just a 5 per cent deposit. Previously it was a minimum 10 per cent deposit.
There have been a few lenders offering more than 4.5x salary recently (notably Habito) and I am interested in views on whether it's a good idea to take on this kind of borrowing, especially given increases in the cost of living.
What do borrowers need to look out for when they're borrowing a higher salary multiple, and particularly with a small deposit? How can they minmise risk of negative equity and make sure they choose a property that will gain value etc?
Deadline is ASAP.