FIRST-TIME buyers might find it a little easier to get on the housing ladder today after Skipton International announced it was bring back the 100% mortgage.
Prospective homeowners have found it increasingly difficult to buy since the global economic crisis struck as lenders tightened their belts.
The 100% loan-to-value mortgage has become extinct from the market during the last two years. Lenders in Guernsey have not even been offering a 95% product.
But Skipton International’s director of lending Nigel Pascoe said the company was trying to help those who were struggling to save enough money to cover the deposit plus legal fees.
‘We are trying to help the house purchasing process,’ he said. ‘It’s been so flat for such a long period of time we thought this would be of great benefit, particularly to the first-time buyer.’
Its Next Generation Mortgage does, however, require a family member to act as guarantor for a maximum of 15% of the purchase price.
This money is either given in the form of a bond on the family member’s own house, or in cash held by Skipton International. Interest on the money is paid to the guarantor.
The guarantee would remain in force until the value of the purchased property had risen to a level whereby the amount borrowed amounted to 85% or below.
‘The calculation of loan-to-value will be backed up by a valuation from a valuer on Skipton International’s approved panel,’ he said.
Mr Pascoe said he was not aware of any other provider in Guernsey even offering a 95% mortgage.
‘I think this product will stimulate interest,’ he said.
‘We have seen a lot of family support over the last two or three years where parents have contributed 10 to 15% plus legal fees in order to help their child get on the property ladder.
‘While that will continue, this is just another variation for them to help their children acquire a property.’
Article posted on 21st November, 2009 - 2.29pm
3 Article Comments
So that would be a 85% mortgage then.
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Skipton states: Its Next Generation Mortgage does, however, require a family member to act as guarantor for a maximum of 15% of the purchase price.
Who in their right mind would go as guarantor and put a bond on their house for someone else, i certianly wouldnt!!!
I think first time buyers(i was one last year thank you) should just face it, life has changed and if you have to put up 10% then save save save!!!
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Steve – it is still technically a 100% mortgage as the lender still provides 100% of the capital; the only difference is that 15% of the loan is secured against another family member.
I do get your point though and would suggest there are better ways to fund a house purchase than this. For example, why get your parents to stash 15% of their savings at Skipton as security, when they could either give the money to their children or lend it at a rate of interest that is:
- lower than the mortgage thus saving the children money
- higher than Skipton are paying out, this making it an investment – albeit higher risk.
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