100 per cent LTV mortgage back on the market for First Time Buyers
After earlier this week reporting on NatWest Intermediary Solutions’ olive branch for first time buyers, a special two-year fixed rate mortgage up to 90 per cent loan to value (LTV) at 4.99 per cent with no fee, another tree of opportunity has sprouted for this struggling market.
Specialist lender Aldermore has introduced The Family Guarantee Mortgage – a three year fixed rate mortgage up to 100 per cent LTV at 6.48 per cent, available on a repayment basis only and with a maximum loan of £250,000. The borrower also has to be 25 or over.
However, as with most things in life, it comes with a catch; 25 per cent of the loan must be “guaranteed by a parent or guardian through a charge on their own property.”¹ However, this parental guarantee is only required for the first 10 years, or for an even shorter period should the “loan to value on the mortgaged property falls to 75 per cent or lower”¹.
Charles Haresnape is the Managing Director of Residential Mortgages at Aldermore. He said:
“Family support in the form of gifted deposits has become commonplace and is widely accepted by most lenders. The Aldermore Family Guarantee Mortgage gives much greater flexibility, enabling guarantors to retain savings and instead provide a guarantee, requiring no cash deposit.
“We’ve carefully considered the needs of the guarantor, resulting in a guarantee that is capped at the originally agreed amount. The guarantee can also be repaid at any time, or released if the loan to value on the mortgaged property falls to 75 per cent or lower.
“Perhaps more importantly, we’ve limited the guarantee period to just 10 years at which point it will expire, giving guarantors clarity as to how long their commitment will last.”
The relaunch of a 100 per cent LTV mortgage may not be a new offering – Northern Bank, the Northern Irish lender, and Tipton & Coseley and Marsden Building Societies already have 100 per cent LTV mortgages in their product ranges. However, while these three lenders are restrictive to local customers, Aldermore’s Family Guarantee Mortgage is available to potential first time buyers nationwide.
The Aldermore Family Guarantee Mortgage is being trialled via three distributors – Connells Group, Arun Estates and 3mc.
¹Mortgage Solutions (Sep 2011)
Content correct at time of publication