The Starter Mortgage is the latest product to launch in the UK, supporting buyers with smaller deposits. Leeds said its goal is to put homeownership within the reach of more people.
The mortgage, available to first-time buyers through brokers, combines a high loan-to-value with what Leeds describes as ‘competitive income requirements’.
As well as offering loans at five times income – up from the standard 4.5 times – the mortgage includes a minimum income threshold of £30,000 and a maximum loan size of £500,000.
For example, a single or joint applicant with a household income of £49,000 and a deposit of £5,000 can borrow £245,000 to buy a house worth £250,000. This represents a loan-to-value ratio of 98%.
It is available as a five-year fixed rate mortgage at 5.65%.
Martese Carton, mortgage distribution director at Leeds Building Society, said: “Affordability remains one of the biggest barriers facing first-time buyers today.
“With our new Starter Mortgage, we are combining higher Loan-to-Value loans with flexible income multiples to better reflect earning potential and housing costs.
“We know that there is no one-size-fits-all approach and that is why we want to support brokers in finding solutions for their customers.
“We are proud to support ambitious buyers in achieving and maintaining home ownership by following careful affordability assessments to ensure they do not overextend themselves.”
David Hollingworth, associate director at estate agent L&C Mortgages, said: “The desire to buy a first home remains strong, but potential first-time buyers are all too aware of the challenges that remain.
“It is far from easy to be able to borrow enough and demonstrate affordability and at the same time save a significant deposit.
“Products such as the new Leeds Start Mortgage offer alternative options for advisers and their clients.
“Combining a small deposit requirement of just £5,000 with a realistic approach to affordability will help tackle these challenges.
“That could make a real difference to aspiring first-time buyers and make the hope of owning their own home a real possibility.”