It looks like 90% mortgages are to be offered by multiple banks.
This month Northern Rock, Yorkshire and Clydesdale banking institutions have relaxed their lending criteria to help to make life less difficult for people who cannot save up substantial deposits. The Rock is offering 90% mortgages, while the other 2 banks, both owned by National Bank of Australia, may consider lending up to 95%.
The 3 banks join about half a dozen rivals that promise to offer 90% mortgages. Big names like C&G, Halifax, HSBC, NatWest and Santander all say they could help if you’ve saved up to ten% of your property value – although their application procedures tend to be tough and you will be declined unless you’ve got a decent job and perfect credit report and you are buying a very mainstream house.
If you pass the selection procedure the bad news is that your loan won’t be cheap.
• The Rock’s five-year fix will be set at a huge 6.59%, though at least the application charge has recently been cut to zero.
• NatWest’s five-year fix looks less costly at 6.29% but there is a £999 application fee.
• C&G offers a five-year fix at 6.89% if you shell out the £1,094 fee as well as an alternative at 7.09% where the fee is reduced to £99.
As common, it makes sense to compare the total cost of rival deals before selecting the best – the True Cost Home loan calculator at www.thisismoney.co.uk is made to do just that.
The selection process pertaining to 90% mortgages is set to be even more difficult – and the jury is out on whether or not it’s wise to sign up for them. If house prices fall further, low-deposit customers will become among the first to face negative equity and might be not able to re-mortgage till the economy improves.
Yorkshire and Clydesdale offers a three-year fix at 6.99% along with a £599 charge. When the deal comes to an end in 2014, you have to remortgage or will go on to the lending institution’s standard variable rate – at the moment 4.59% however likely to end up being much higher by then.
Nottingham Building Society and LloydsTSB are the only other options for individuals seeking 90% mortgages. The former’s threeyear fix is set at 6.39% possesses a low £195 fee, however the standard variable rate you face having to pay in 2014 is currently a skyhigh 6.14% consequently remortgaging somewhere else will most likely be essential.
LloydsTSB’s offering is the ‘lend a hand’ scheme offers 90% mortgages if parents place 20% of the house price in a savings account as security (later on this year the lender hopes local authorities might put up the security money for buyers without rich parents). Rates differ but are unlikely to end up being less than 6%, fixed for three years.