You are here: Home - Mortgages - First Time Buyer - News -

Why the National Insurance hike could impact your mortgage application

0
Written by: Lana Clements
04/04/2022
Santander is updating its mortgage affordability models to factor in the National Insurance hike and the added pressure facing households amid the cost-of-living crisis.

The lender will factor increased National Insurance, household expenditure and dividend income tax rates, as well as changes to Scottish tax bands into its affordability.

In September last year, Prime Minister Boris Johnson announced NI would increase by 1.25% in April 2022 to fund social care, while he also said a 1.25% rise in dividend tax would be introduced.

Now Santander has told mortgage brokers that its affordability calculations would be adjusted to reflect these changes from Wednesday 6 April, coinciding with the new 2022/23 tax year.

Five-year fixed, like-for-like remortgage and retained property residential stress rates are to be raised too.

Santander confirmed all full mortgage applications submitted by close of business on Tuesday 5 April will be based on its current affordability rules.

Lender changes to affordability is expected as the cost of living changes, according to Imran Hussain, director at Harmony Financial Services.

He said: “With living costs spiralling out of control and National Insurance and dividend income tax rates rising, it should not come as a surprise that lenders will have to adjust how much they will allow people to borrow.

“They have a responsibility to ensure all borrowing is affordable. Some have done so already, while others are doing so.

“If anyone is in a position that they are unable to borrow when they come to remortgage, depending on the lender there may be options to switch products.

“However, the value of advice at this point will be more important than ever before.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

Low-income pensioner? You could gain £3k top-up

Hundreds of thousands of retirees struggling with a low income are missing out on Pension Credit worth £3,300...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week