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100 per cent mortgage being offered once again, but is it a good idea?
06/09/2011
The 100% mortgage is being offered once again, this time by a fledgling bank. This will enable first time buyers the opportunity to get on the property ladder which is good news for the housing market.
However, this mortgage named the family guarantee mortgage comes at a cost, namely to the relatives. To be able to apply for this loan, a member of the family must be able to guarantee any borrowing of £75,000 and over, usually by using their home as insurance.
The Aldermore is the first financial institution to offer this deposit free mortgage since it became non-existent three years ago during the credit crunch when the property market crashed.
It has been seen as a controversial move by Aldermore and others have described it as irresponsible as it could place young people in more financial difficulties. But, with most mortgages still needing large deposits and the price of living still high, this may be the only way for many first time buyers to get onto the property market.
But, the financial pressures this could put on the guarantor of the first time buyer if they fail to pay their mortgage means that it may be easier and more practical to seek advice on releasing equity or in some cases borrowing further funds on current equity release to help grandchildren with a deposit to put them and the guarantor in a better position.
Homeowners aged 55 years and over who are concerned about their grandchildren not being able to take their first step onto the property ladder can seek help. They can find out how releasing equity or borrowing further funds on their current equity on their home can help their grandchildren advance from rental to first time buyer, by contacting the right equity release for advice on how to achieve this.
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