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Abbey pilots 100 per cent plus mortgage deal

Abbey has launched a 100 per cent loan to value product with the option of a £25,000 secured loan.

A spokesman for the lender says that it is currently only trialing the product with select brokers including London & Country.

Abbey says it is reviewing the product on a day to day basis so does not know when it will officially launch the deal.

The lender recently re-entered the 100 per cent mortgage market after having not played in the arena for several years.

The Abbey spokesman adds: “We are currently piloting a 100 per cent LTV plus product in our branches and through key brokers. Since Abbey has strong risk experience in the mortgage markets and is responsible in its approach, we thought it prudent to run this as a pilot scheme only.

“The product is a 100 per cent loan to value mortgage plus a secured loan of up to £25,000, dependant on individual circumstances. We will assess whether it becomes a permanent part of our portfolio going forward once we have tested this in the marketplace.”

Abbey points out that if the mortage size is under £100,000, the maximum secured loan will be proportionately lower.

Moneyfacts.co.uk mortgage expert Julia Harris says: “The extra money these loans can provide borrowers can be a lifeline in helping borrowers get on the property ladder, providing vital cash for stamp duty, legal fees and even essential home improvements. But borrowers should remember they are starting their mortgage effectively in negative equity, requiring over 25% growth in the property market before they can see any equity in their property. While prices continue to rise, especially at the pace we have seen over the last few years these can soon be recouped, but it is unlikely that such a growth rate is sustainable.

“These loans can be a perfect solution for some borrowers, but should be taken with a wealth warning. Their success relies on an increasing property market. Borrowers should not forget they are spreading the cost of their additional borrowing over a long period of time and therefore accumulating a hefty interest bill.”

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