HSBC’s fee-free 90% LTV mortgage could help existing homeowners and FTBs alike

Published: 29/11/2011

With so much focus on the plight of first time buyers, the needs of existing homeowners, including second time buyers, are being neglected.

According to research by high street bank, HSBC, there are approximately 360,000 homeowners who, having bought their first home in 2007, are trapped in these properties unable to move or remortgage.

The dramatic drop in house prices over the last four years has left many homeowners in negative equity and without enough capital to meet the hefty deposits now required.

HSBC believes a second time buyer now needs to raise £27,000 to fund the move up the ladder. This figure covers the cost of selling their first property, paying Stamp Duty on their second and raising a 10 per cent deposit, which we all know is meagre in the current market.

But the London-based bank has just launched its first ever 90% loan-to-value mortgage below 4 per; a fee-free two-year discount mortgage at 3.84 per cent with free valuation and tapered early repayment charge.

Whilst other lenders may offer something similar, this 90 per cent LTV mortgage is available to all borrowers and not just the solitary first timer.

The deal has hailed as a “breathtaking and phenomenally competitive”¹ deal by industry bods. However because the 90 per cent deal’s interest rate will move in line with the bank’s standard variable rate.

Rachel Springall, Spokesperson for Moneyfacts.co.uk is taking a more glass-half-full approach:

“This deal is an exciting and fresh addition to the high LTV mortgage market and should prove popular with many borrowers looking for a competitive variable rate mortgage.”¹

¹Mortgage Solutions (Nov 2011)

Content correct at time of publication