Wayhome has announced changes to its offering that could give aspiring first-time buyers the chance to buy a property worth up to 10 times their gross household income.

The firm stated it has reduced the minimum day one yield for its criteria.

According to UK Finance figures, tight lending stipulations mean that mortgage lenders will typically offer would-be first-time buyers approximately 3.5 times their gross household income.

For a couple with a gross household income of £50,000 per year, this means they would be limited to a loan of £175,000. Assuming this couple could raise a £25,000 deposit, the most this couple could afford with a conventional mortgage is a property worth £200,000. However, if the same couple were to use Wayhome’s gradual homeownership product, they could afford a property worth up to £500,000 without any increase to their deposit.

Wayhome is backed by institutional investors which provide the funding to buy properties. Customers must purchase at least 5% of the home and then rent the proportion they don’t own, at a fair market price. Crucially, customers can staircase as often as they like, without any fees.

Commenting on the model, Wayhome CEO, Nigel Purves, described the gradual homeownership proposition as “a truly unique product”.

“That is why we’re the first in the UK to be able to offer people homes worth up to ten times their income, with just a 5% deposit,” Purves said. “We can still do this in a 100% prudent, sustainable way – there’s no mortgage debt in gradual homeownership, and rental payments are not linked to interest rates, so there’s absolutely zero risk of negative equity for our customers.

“There is a cruel distortion at the heart of our housing market: a person or family might be able to comfortably afford the rent on a particular property – yet a lender decides they can’t afford to buy it. At Wayhome we’re changing this by helping people gradually buy the sort of home they could only otherwise afford to rent.”

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