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Return of the 100% mortgage

Written by Sam Jones on 05 September 2011.

The first 100% mortgage to be released on to the mortgage market since the depths of the recession and credit crunch, today’s news is further evidence that the mortgage market is starting to improve. Today’s news should strengthen consumer and banking confidence within the mortgage market, pleasing the mortgage broker in the process.

However, undoubtedly, there are strings attached to this mortgage. Eager to avoid the mistakes which led to the previous crisis, a family member will be asked to provide a guarantee secured against the residential property at least 25% the value of the property in question. Rates are also relatively high for the product, which may put off potential customers.

Charles Haresnape, managing director of residential mortgages at Aldermore, said: “Family support in the form of gifted deposits has become commonplace and is widely accepted by most lenders. The Aldermore family guarantee mortgage gives much greater flexibility, enabling guarantors to retain savings and instead provide a guarantee, requiring no cash deposit.

“We’ve carefully considered the needs of the guarantor, resulting in a guarantee that is capped at the originally agreed amount. The guarantee can also be repaid at any time, or released if the loan to value on the mortgaged property falls to 75% or lower.“Perhaps most importantly, we’ve limited the guarantee period to just 10 years at which point it will expire, giving guarantors clarity as to how long their commitment will last

The mortgage offered by Aldermore may be a useful facility for parents that have plenty of equity in their homes but do not have spare cash to help their children raise a deposit, however it is crucial guarantors understand the risks and are undertaken through the mortgage process by a mortgage broker.

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