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Huge leap in cap ad for 100% LTV loans revealed by Imla

The Intermediary Mortgage Lenders’ Association is warning the Government that capital adequacy requirements on 100 per cent LTV mortgages are as much as 185 times that on 70 per cent LTV deals.

Executive chairman Peter Williams has sent evidence to the Government revealing the massive gap in capital adequacy requirements.

Williams says: “The example we sent was for a £100,000 mortgage, at 70 per cent LTV, the capital needed by banks is under £100, but for 100 per cent mortgages that increases to around £13,000. That is an increase of 185 times.”

Imla says one way to even up the balance would be to create Government or privately sponsored mortgage indemnity guarantees, which would offset the risk and in turn allow for less capital. But Williams says Government officials and lenders are currently uncomfortable with the idea of guarantees after all the problems surrounding them in the 1980s and 1990s.

He says: “These figures illustrate why lenders are so much more sensitive about LTVs right now. It is going to be a big issue.”

Brentchase Financial managing director Mike Fitzgerald adds: “The lack of higher-LTV loans are stalling the market. Unless we find a way round this problem, we are going to be in the doldrums for years to come.”


IFA talk highlights PMI opportunities

The Association of Medical Insurance Intermediaries is hosting a session for IFAs at its annual conference that will focus on private medical insurance as an additional revenue stream.

Alternatives to pensions

Managing one’s investments (incorporating appropriate asset allocation) to produce acceptable returns while managing risk takes absolute priority in portfolio planning. However, maximising the tax efficiency to minimise tax on investments can substantially add to the bottom line.

Tapering of annual allowance – adjusted and threshold income

The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing.  Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from 6 April 2016.  Our previous article Tapering of annual allowance […]


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