Post-credit crunch, you could be forgiven if your initial response to the idea of a new 100% mortgage with the Halifax was disbelief.
And then when we confirm that it’s true, you could further be forgiven for the visible shivers down your spine. Have we returned to the early nineties?
Relax. We haven’t.
This new Halifax mortgage is called a Mortgage Boost. It has been specifically designed for First Time Buyers and it requires the support of family members as guarantors.
A loan of up to £500K is available, with the guarantor putting up to 10% of the purchase price into a savings account as a guarantee in case of default. A product like this means that First Time Buyers may be able to jump onto the property ladder without having had to save a deposit; an attractive proposition for those that have been living in rented accommodation.
The downside to this is that the guarantor has their savings locked away for a set number of years. This can vary from 3 years and more, depending on the lender’s criteria. This might be that the borrower has paid the amount held in guarantee off the mortgage value, or the loan-to-value has reduced to an acceptable level for the lender.
The guarantor should ensure that they are fully aware of what they are signing up for, because should the need arise, it’s unlikely that they’ll be able to access their savings early. For the guarantors, sound medium-term financial planning is crucial. There is an added bonus though; they’ll receive interest on their savings at a rate of 2.5% interest and so it’s not all bad!
These particular mortgages are only available directly from the Halifax. And it will most certainly be First Time Buyers that will benefit from these 100% mortgages.
A whole-of-market broker is obliged to give you the most suitable advice for your specific situation and discuss the pros and cons of every deal with you. So, before you jump onto the 100% ladder, ask a whole-of-market broker like Mortgage Search Go to check the market for YOU. We may be able to send shivers of delight down your spine!
*Your home may be at risk if you do not keep up repayments on your mortgage.