125 per cent mortgage welcomed by consumer website
Published On 5 April 2007
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.
While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move.
"I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website.
"It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."
Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."
She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."
A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
