There were several headlines last week announcing
Aldermore bank’s new 100% mortgage launched
last week aimed at first time buyers.
Aldermore
are one of the newer banks – only opening
in 2009, and we have found them pretty refreshing
to deal with. They are however taking no big chances
on this product, with a 3 year fixed rate of 6.48%.
The Family Guarantee Mortgage however allows homebuyers
to buy a property without a cash deposit, as long
as a parent or relative guarantees any borrowing
above 75 per cent loan-to-value, with a charge on
their own property. Borrowers must be at least 25
years old, and seeking a mortgage of no more than
£250,000.
From
no 100% mortgages, or even 95% mortgages, available
for the first 2 years after the credit crunch started,
lenders are beginning to understand the market and
get more confident again in offering new products.
There
are now 4 lenders offering 100% mortgages –
with arguably the most competitive being Marsden
Building Society’s Family Offset Deposit Assist
mortgage whereby the borrower’s relative must
keep savings equal to at least 20 per cent of the
property’s value in the society’s offset
savings account. Its mortgage rate is attractive,
at 3.99 per cent with a fee of £498.
As
with buy to let generally it is better to invest
with a deposit to get the best rates.
100%
mortgages got a bad reputation at the height of
the credit crunch as people clearly are now in negative
equity that took these out at the peak of the market
– although that for me was not the biggest
problem with the lenders at this time – i.e.
whether it was your deposit down, or the banks borrowed
money, you will still have lost money if you bought
in 2007 in many parts of the UK.
The
biggest concern was the level of borrowing compared
to earnings that banks lent, plus the questionable
self-certified mortgages, and the relaxed looking
at rental coverage on many properties.
