The 6.48 per cent three-year fixed family guarantee mortgage is available for loans up to 100 per cent of valuation to a £250,000 maximum. The maximum LTV includes a parent, step-parent or grandparent providing a guarantee secured against their property for the loan amount above 75 per cent of valuation. Capital repayments up to the amount of the guarantee can be made without penalty in the fixed-rate period, otherwise an early redemption charge will apply. This charge is 5 per cent of the amount repaid in year one, 4 per cent in year two and 3 per cent in year three.
Defaqto insight analyst for banking David Black says: “Potential property buyers face a perpetual struggle to get on the property ladder given the substantial deposits required so it’s refreshing to see that some 100 per cent LTV deals are available to them. The catch is that a collateral guarantee is required on a family member’s residential property.
“Aldermore’s L&G Mortgage Club exclusive has a three-year fixed rate of 6.48 per cent and total fees of £1,298. Tipton & Coseley Building Society offers two similar family assisted products at 100 per cent LTV: 6.69% fixed until October 31, 2013 and a 0.1 per cent discount until January 31, 2014 with an initial rate payable of 4.89 per cent. Both have a 0.4 per cent arrangement fee and are only available in the Midlands.
“These types of mortgage provide a way of buying a property without a deposit and will have some appeal for that reason. But the interest rates charged are high when compared to the average fixed rates of 3.91 per cent and 4.49 per cent for two and three-year fixed rate mortgages respectively.