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Tax hike to take toll on homeloans

The ability of higher-earners to secure mortgage finance could be seriously damaged by the changes to higher rate’ income tax next year, according to experts.

Chancellor Alistair Darling revealed he would be raising the income tax rate above £150,000 from 45 per cent to 50 per cent. Experts say this will affect high-earners’ ability to secure finance.

Largemortgageloans.com senior mortgage manager Ian Gray says: “Once lenders factor in the tax increases into their affordability calculators, it is going to make it a lot harder for high-earners to secure mortgages as their income potential will have been seriously impinged.

“Since the start of the credit crunch, lenders have tightened up affordability considerably, so a lot more high-earners will find the computer says no after this tax hike.”

John Charcol senior technical manager Ray Boulger says: “It will be interesting to see what lenders do about the affordability calculators over the tax changes.”

Stroud & Swindon sales and marketing director Linda Will says affordability will definitely be affected by the tax changes. She says: “Affordability looks at disposable income, so it will reduce what offer comes out from the calculator. But I do not think it will affect mortgage offers dramatically, as it is all dependent on how much more than £150,000 the borrowers earn.”

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