Mortgage bulletin for week commencing Monday 17 February

Posted 17 February 2014

The government's Help to Buy mortgage guarantee scheme can now also be used by providers of Home Purchase Plans (HPPs), an alternative to a mortgage that is compliant to Sharia law and sometimes referred to as an ‘Islamic Mortgage'.

The Islamic Bank of Britain has stated its intention of participating in Help To Buy and offer HPPs under the scheme. Meanwhile, HPPs currently offered by the Islamic Bank of Britain (IBB) include a discounted variable rate of 3.99% finance-to-value (FTV) until 31 December 2015, when the rate returns to the bank's Home Finance Rental Rate of 4.49% (Bank of England base rate plus 3.99%). The Bank also offers a fixed-rate deal at 4.19%, reverting to the IBB Home Finance Rental Rate, currently 4.49% from 1 January 2016. Both deals have an administration fee of £399, are available to finance amounts of up to £750,000 and include solicitor's fees to a maximum of £400, including VAT.

Mortgage Trust has launched a range of 80% loan-to-value (LTV) buy-to-let products. The specialist lender, which is part of Paragon Mortgages, has launched a two-year fixed-rate mortgage at 4.10% with a 1.75% product fee, or 4.95% with no product fee. There is also a two-year tracker with an initial rate of 3.70% (LIBOR+3.10%) with a 2% product fee, or 4.70% (LIBOR+4.10%) initial rate and no product fee. These are limited quota products and all benefit from free valuation and are available for purchase and remortgage.

John Heron, the company's managing director of mortgages, says: "We are pleased to be able to further extend our buy-to-let proposition with these 80% LTV products. We are confident that high credit standards can be maintained at these levels and our extensive data on many years of buy-to-let lending supports this. A primary requirement of landlords is to generate an optimal return on capital. Subject to a strong affordability profile these products will assist landlords in doing just that."

The Post Office, along with its financial services partner, Bank of Ireland, has launched a series of buy-to-let mortgage deals. The new offering includes a range of two-year, three-year and five-year fixed-rate products, with deals at both 60% and 75% LTV . The new deals are available online or over the phone.

John Willcock, head of mortgages at Post Office says: "There has been a significant increase in the demand for buy to let mortgages in the last 12 months as more borrowers begin to consider the rental market. We are committed to offering all borrowers competitive mortgages that address their needs - whether they're a first-time buyer, someone looking to move up the property ladder, or someone looking to take out their first buy-to-let mortgage."

Post Office's 60% LTV deals include a two-year fixed rate at 2.89% with an arrangement fee of £1,495, a three-year fixed rate at 3.99% with no fees and a five-year fixed rate at 3.98% with an arrangement fee of £1,495. The 75% LTV mortgages include a two-year fixed rate at 3.29% with an arrangement fee of £1,495, three-year fixed rate at 4.49% with no arrangement fee and a five-year fixed-rate at 4.29% with an arrangement fee of £1,495. All of these mortgages revert to Post Office's variable rate of Bank of England base rate plus 4.49% after the fixed term.

Halifax is offering a range of fixed-rate re-mortgages on loans up to £1m at up to 85% LTV, available on a repayment basis. A two-year fixed rate with no product fee is 3.39%, or 2.99% with a product fee of £995, while the five-year fixed rate is currently 4.94% with no product fee or 4.74% with a product fee of £995. Halifax also offers a two-year fixed-rate mortgage for loans of over £1m up to 80% LTV at 3.19% with a product fee of £1,995.

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