The Return Of The 100% LTV Mortgage

For the first time since the credit crunch, a 100% LTV mortgage is now available for first time buyers.

First time buyers are now able to apply for a 100% LTV mortgage, which is now offered by Aldermore, a new British Bank.

The mortgage, called a Family Guarantee Mortgage is designed for those with no cash deposits, however it has to be guaranteed by either the parents or grand parents of the applicant.

The family guarantors will be asked to provide a guarantee of the loan amount above 75% LTV. The guarantee has to be secured against the equity in the guarantors property.

This means that for the first time buyer to be successful in applying for this mortgage, their parents or grandparents must have sufficient equity in their own homes in order to cover the FTB’s mortgage above 75% LTV.

The FTB must also be in a good financial position to take on the mortgage as Charles Haresnape, Managing Director of Residential Mortgages at Aldermore explains:

“Borrowers must be credit worthy 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 residential property”

The guarantors will not be faced with an open ended commitment, however as the guarantee expires after ten years, or if the LTV percentages falls below 75%, as can happen if the FTB overpays their mortgage or else the value of their property rises significantly.

The Family Guarantee Mortgage has a three year fixed rate of 6.48%.

MoneyHighStreet.com Comments: This is very welcome help for first time buyers however it does place the onus on parents and grand parents to be in a position to help their offspring out. It is clearly aimed at well heeled applicants with well off parents or grand parents.

It will be very interesting to see how other lenders respond. Hopefully this could be the start of other 100% LTV mortgages becoming available, perhaps with less onerous restrictions.