Looking around for the no-deposit & low-deposit deals…
Trying to look into the no-deposit & low-deposit deals, if any, on offer for home buyers can be very difficult. Just a few weeks ago you could have found at least half a dozen firms providing mortgages which let prospective home buyers borrow up to 125 per cent of a particular property’s value.
Now, there’s very little available above 95 per cent loan-to-value. Last week only, Scottish Widows Bank opted to pull its 100 per cent deal - aimed at accountants and solicitors. The most it will now prefer to lend professionals is 95 per cent. As market analysts point out, lenders regard this class of borrowers to be ‘higher risk’ than borrowers with sizeable equity or deposits in their homes, especially if house prices fall, which would add to the risk of negative equity.
A few lenders like Abbey still offer 100 per cent deals, but the rates on these are as much as 2 per cent higher than the equivalent lower ‘loan-to-value’ deals. Abbey is probably the only lender, which is still offering 100 per cent loans - with no conditions to the creditworthy. You can select either a fixed rate or a tracker. However, its deals can be pricey; the two-year tracker rate is BoE (Bank of England) base plus 2.99 per cent - a current pay rate of 8.24 per cent.