Mortgage bulletin for week commencing Monday 28 October
With deposits hard to find for many first-time buyers two types of mortgage are gaining popularity, each allowing parents to guarantee mortgages for their children making a first purchase. The guarantees, either in cash or as a charge against the parents' own home, serve as a deposit, typically 25% of the value of the child's new home.
Parents Offset Mortgages require the parents to put cash, say 25% of the cost of the home, into a linked deposit account. Guarantor Mortgages, or Parents Assistance Mortgages, allow parents to put up the equity in their own home to guarantee the loan. Lloyds Bank and the Bath Building Society are two lenders that offer this type of deal. If the child keeps up his or her payments, then the parents have nothing to pay. However, if the child defaults on his or her mortgage then the parents will be liable for the shortfall.
Meanwhile, keen to keep its existing Halifax borrowers, the Bank of Scotland has announced the launch of a new cash-back offer. The deal, available until 24 January 2014 to existing Bank of Scotland customers with Halifax mortgages, gives £250 cashback toward the cost of moving or taking out additional borrowing.
A new ‘best-buy' Fixed Rate mortgage has been launched by Norwich & Peterborough Building Society. The Society has reduced the rate of its five-year fixed-rate mortgage for loans up to 65% loan-to-value (LTV) to 2.84%. The offer carries a £295 product fee, with free valuation and a choice of free legal fees or £200 cash back.
Virgin Money has reduced the cost of borrowing across a range of LTVs. For customers with smaller deposits, its 90% LTV two-year fixed-rate mortgage is now 4.29% with a £995 fee. Virgin Money's two-year fixed-rate is now available at 2.29% up to 75% LTV with a £995 product fee, and the two-year Tracker Mortgage at 1.89% at 70% LTV, with a £995 product fee. Fee-saver products up to 70% LTV have also been improved, with the new three-year fixed-rate at 2.59% with no fee, and a five-year fixed-rate at 3.19% up to 70% LTV with no fee.
Skipton Building Society has launched three new limited edition mortgages, two aimed at people with lower LTVs who are looking to remortgage, and one at first- and next-time buyers with smaller deposits. Available through the society's Skipton Direct customer service centre, branches and all intermediaries, the two-year fixed rate at up to 60% LTV has an interest rate of 2.39%, with no application or completion fee. The equivalent three-year fixed rate has an interest rate of 2.78%.
For homebuyers with a 10% deposit, Skipton is offering a new two-year fixed-rate deal at 90% LTV for 3.99%, with a £499 completion fee, replacing their current 90% deal at 4.19% with £195 application fee and £800 completion fee. All of these new products carry ERCs, with overpayments of 10% are allowed each year without penalty. Remortgagers benefit from free standard legal costs and valuations.
Nationwide has reduced rates for existing customers on new mortgages at 80%, 85% and 90% LTV. New two-year fixed-rate mortgages at up to 90% are now 3.99% with £900 product fee, reduced to 3.89% for existing borrowers. Its 3.24% two-year fixed-rate at 85% LTV with £900 product fee, is reduced to 3.14% for existing Nationwide mortgage customers. The 2.79% two-year fixed-rate at 80% LTV with £900 product fee is reduced to 2.69% for existing customers, while the three-year fixed-rate at 80% LTV is 3.09%, or 2.99% for existing Nationwide mortgage customers. First-time buyers get a £500 reduction in product fees on all of the above.
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