Aldermore is to launch a 100% LTV mortgage for first-time buyers which will be trialled through two estate agency chains, Connells and Arun.
The ‘Family Guarantee Mortgage’ is designed for borrowers who do not have large cash deposits. Parents, step-parents or grandparents will be asked to provide a guarantee secured against their residential property for the amount of the loan above 75% LTV.
The guarantor can be released once the LTV falls below 75%.
Available in England and Wales, borrowers will have to be at least 25. The mortgage has a three-year fixed rate of 6.48% .
Charles Haresnape, managing director of residential mortgages at Aldermore, said: “Many first-time buyers have become disenfranchised from the housing market because of the large deposit demanded by most lenders.
“We believe this is the single biggest issue facing first-time buyers and it needs to be addressed head-on if the UK’s housing market is to have a chance of recovery.
“Buying and setting up a first home is an expensive process, which puts enough strain on a first-time buyers’ finances without the additional pressure of needing to save a large deposit. Borrowers must be creditworthy and have sufficient income to comfortably afford their monthly mortgage repayments, with parents, step-parents or grandparents willing to provide a guarantee secured against their own residential property.”
Haresnape added: “Family support in the form of gifted deposits has become common-place 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% or lower. Perhaps most importantly, we’ve limited the guarantee period to just ten years at which point it will expire, giving guarantors clarity as to how long their commitment will last.”
Loans are available on a repayment basis only (no interest-only) and the maximum loan size is £250,000. There is a non-refundable booking fee of £299 and a completion fee of £999.
David Lench, managing director of Arun Estates, said: “Arguably the single biggest challenge facing the property market in recent years has been the inability of so many aspiring first-time buyers to get a mortgage, thanks to impossibly steep deposit requirements.
“Now at long last there is a product available that can really help them, and we at Arun Estates are proud to have been chosen as one of the first agents in the country to offer it.”
David Livesey, group chief executive for Connells, said: “Despite recent headlines about ‘generation rent’ and the UK taking a more European approach to home ownership, we believe there are many people who would prefer to buy their first home but feel disillusioned with the mortgage market and have lost hope of buying their own property.
“Indeed, our branches have registered 34% fewer first-time buyers in 2011 compared to the peak in 2007.
“Helping first-time buyers on to the property ladder is a top priority for Connells and we will be doing everything possible to ensure this product is available to the widest possible audience via our national network of mortgage consultants.”
Comments
Has anyone heard about Arun estates bring back 100% mortgages? I think it might be a good way for first time buyers to get onto the property ladder. It means that those contemplating buying a home will not have to save for a deposit which could speed up the process. Take a look here at Douglas Allen doing so
http://daln.co/100PercentMortgageDouglasFacebook
I think 100% mortgages are a great way for first time buyers to get onto the property ladder. Here Pittis are offering 100% mortgages http://ptts.co/qY94ZN
Absolutely FBA, Neg Eq doesn't matter if you aren't selling or remortgaging. That's it.
However, any FTB buying with more than a 90% LTV mortgage now will almost certainly be in Neg Eq by the time their deal expires so will have to lump it with their lender's SVR.
It's anyone's guess what base rate will be by then but is sure as heck won't be 0.5%
Another thing, anyone that can't demonstrate they're financially savvy enough to save-up at least 10% deposit doesn't warrant a mortgage in my opinion.
FBA - In your message to sib, I agree with your first paragraph and some of the last. I dont think the second was not required. See we dont have to be childish do we.
Sib,
Some folks will live with Neg Eq, it only comes into play if they want to sell. (and soon after purchasing).
People who buy a new car, roll it off the forecourt, dont really immediately want to sell it because its value just dropped like a stone, or do they? I may be wrong here??
Buy a home to live in it, and afford it, and you wont go far wrong and it is far better than renting, this is my advice to FTB at present
Thanks for confirming what I already thought FBA, that this product is one which you'd happily recommend to a total stranger.
In any event, as Jonnie points out, this product is designed to generate PR for the lender, no more, no less.
In it's fact akin to those loathsome first time buyer schemes. All bluster but only a handful of people actually 'benefit'.
Besides which, any mortgage product more than 90%LTV is sheer folly. It's not about 'affordability' all it does is increase your chances of going into Neg Eq and being at the mercy of the lender's SVR and BoE base rate.
FBA - I think the irony is lost on you.....dont choke on your lego!
OK so take it as statement of my opinion "Banks are not going back to cheap 95%" how many banks do you see providing a 95% LTV for FTB''ers
Currently there are many vested groups lobbying for the return of 95% LTV I do not think this will make any difference in the short term. I am not saying there is anything wrong with 95% loan to value mortgage I had one myself
"A bigot is a person obstinately or intolerantly devoted to his or her own opinions and prejudices, especially one exhibiting intolerance"
What expressions have i given here that make sound like a bigot?
Unhappy,
You also tell lies,
you said:- ......."A HPC'er accused FBA of being childish on here.......FBA replied shut up poopy pants :0)"
This was never, ever said. This further diminishes any credibility you might think you have.
No longer an idiot, now a lying idiot.
Well done, keep it up
Unhappy,
You wrote...... "Banks are not going back to cheap 95%" .. now that is a statement if ever I saw one.
You then go on....... "no amount of lobbying is going to change that" ..again, another sweeeeeeping statement.
Yes Sir, you are an idiot if you cant see the difference between a statement and an opinion.
I absolutely agree that opinions should be expressed and debated but you are unable to 'express' yourself without sounding like a bigot, In my opinion it just makes you out to be an idiot.
A HPC'er accused FBA of being childish on here.......FBA replied shut up poopy pants :0)
FBA - Curently only 2% of the mortagage products available to FTB'ers are at 95% LTV. Please notice i used the word cheap before i said stated a LTV. I also did not use the word never but it is my opinion that in the short to mid term (my guess at least the next 18-24 months) the mortgage market will remain severly subdued.
This is a forum it is all about opinions, or is it only yours and those that agree with you who count....please refrain from petty name calling it insults your intelligence.....or perhaps indeed the idiots are out!
Sib,
The answer is no.
And the reason is:- (pregnant pause)
All my friends and family are middle class & well off.
Hope this helps.
FBA's already highlighted that this is a niche product. It's not going to revolutionise the lending market.
There are peope out there who can afford the monthly repayments of said product, but don't have anywhere near enough of (or no) deposit. For such a person, this could be good.
If they are happy with the property price, can afford the repayments and want a house as a home, not an investment, then this product will get takers.
They are people out there who suit this. A house is a home and people have lives to live - you can't spend it all worrying about up's and down's, if, buts and maybes.
It is definitely not going to suit all FTBs, but everyone is different with their own wants and needs.
Too many people quick to shoot down any suggestion, when they consider it from their OWN point of view.
Fair enough FBA, let's turn this around.
Is this product one you would recommend to your friends and family?
If not, why not?
you lot are all idiots.
This 'Family Guarantee Mortgage' - is the guarantee that it will break up a family and set one generation against another?
The idiots are out again.
Who said anything about self cert? Doh! Homer is in the room again.......
OK Unhappy, what do you want to stake on 'never' seeing a 95% product ever, ever again? Your house, your life, your wife, your reputation?
Is there any way you can (pretty please) refrain from making statements and begin making suggestions based on your opinion. Your statements are boring and incorrect.
Banks are not going back to cheap 95% and self cert mortgages and no amount of lobbying is going to change that they are looking after themselves not the housing market.
Oh dear
I've gone all funny, I absolutely agree with Sibley, BRIT and all that, a horrid little gimmick that has a snazzy headline and naff all else.
funny thing is they feel the need for a press release to tell us all how great they are so it has more than a whiff of an idea that won't actually take off
Let's face it, if you had a decent 100% deal you would be able to 'sell it out' pretty sharpish if it stood up to any degree of scrutiny
Jonnie
Oh My God!
Sib, you worked all that out... well done.
Yes I had worked all that out too... WoW! bully for me.
Nonetheless, it is a product, it will have take up, it has a niche. I am saying a better one would revolve around 95% funding with a realistic interest rate. Such a product would find a far greater niche.
Yes, it could be 75% LTV with a second charge over a second property in respect of default.
The considerations would be affordability (not defaulting on repayments, whatever the market does) and buying at the correct price. AND BUYING A HOME THEY WANT.
If house prices do drop, I think you will find not everyone will immediately go into default on their mortgages as a result. Also, not everyone will rush to the nearest estate agent to sell up either.
If a buyer calculates out their monthly payment in respect of the property they wish to live in, can afford it, do afford it, they will be happy chappies. They will not, not, not cry themselves to sleep every night saying over and over...
"if only I had waited 12 monts my repayments could be £50 a month less"
Remember that rent down the toilet?
Nope.. I dont see it.
It would be about being able to get a decent home now, in the current market, and affording to do so.
A financial boffin will be able to come up with the product, I feel sure of this.
FBA,
This is only a 100% mortgage for the borrower. For all intents and purposes, this is 75% LTV.
There is less-than-zero risk for the lender, sure. But worse-case scenario is two homes getting repoed and not just one.
HPC for the win!
In any event, Aldermore account for less than 1% of all UK lending so don't expect this to reinflate the slowly deflating bubble.
Yes Raymondo,
I do believe 4% is indeed below 5%.
So is 4.1%, 4.2%, 4.3%, 4.4% etc..
@Brit1234
"Well Charlie you are wrong, its high asking prices not deposits which are the problem...."
Well Brit1234 you are wrong, it's deposits, fees & high interest rates which are the (main) problem not the (some) high asking prices.
But I agree, do not touch this mortgage 'offer' it is poison!
@Fun Boy Agent
"A much better product for market would be a 95% mortgage with a realistic interest rate below 5% backed by sound 'valuation' advice at point of offer".
Right!
but possibly 4% currently and low (if any) arrangement fees.
At least there is an acceptance that no matter how YOU feel about it, there is, and will be a market for 100% mortgages. I am not saying it is either right or wrong, just that there is a market for this.
A much better product for market would be a 95% mortgage with a realistic interest rate bellow 5% backed by sound 'valuation' advice at point of offer.
First bank/financial institution to offer this will scoop loads of market share for many many months
"There is a non-refundable booking fee of £299 and a completion fee of £999"
Ah, there it is, and all for the princely sum of 13 hundred quid. Akin to paying someone to punch you repeatedly in the face.
Another thought, what happens when that product expires after the three years (provided they're not already repoed) what then?
I presume an equally - if not more - sphincter clenching SVR rate of, say, 9%.
RE "(Charles Haresnape, managing director of residential mortgages at Aldermore, said: “Many first-time buyers have become disenfranchised from the housing market because of the large deposit demanded by most lenders.
“We believe this is the single biggest issue facing first-time buyers and it needs to be addressed head-on if the UK’s housing market is to have a chance of recovery.)"
Well Charlie you are wrong, its high asking prices not deposits which are the problem.
This sounds a very dodgy scheme which will put first time buyers into instant negative equity and threaten the family home.
How can this even be called 100% mortgage?
Wow so now your home AND your parents is at risk if you dont keep up with the payments! The EA's and VI's are desperate indeed!
Yep AC, it's money for old rope for Aldermore. Mug gets a 100% mortgage more than likely ending up with a vastly devalued home. Lender gets to shaft them with a punitive interest rate (without knowing even what the arrangement fee is).
Is said mug falls behind on mortgage, guarantor (no doubt family) will be liable for any losses incurred through repossession.
"Don't have enough equity in your bungalow gramps? Best put yours up for sale as well".
I pity any fool that touches this manure with a bargepole.
WOW.
6.48%
With an LTV of 75%.
WOW!
Let me just say that again...
WOW...
What a rip off.
If you have a real 25% deposit you can get an interest rate below 2%.
WOW!