View more on these topics

Mortgage Express discounts with Max 130

Mortgage Express

Max 130 Two Year Discount

Type: Discounted-rate mortgage

Discounted term: Two years

Discount: 0.31%

Payable rate: 6.24%

Minimum loan: 25,001

Maximum loan: Up to 130% of valuation subject to a maximum of 300,000

Income multiples: Up to 3.75 times principal income plus second or 2.75 times joint

Conditions: Maximum loan over property value is 30% subject to a maximum of 30,000

Flexible features: Overpayments, underpayments, payment holidays, lump sum withdrawals available through Choices facility, interest calculated daily

Arrangement fee: 449

Redemption fee: 5% of amount repaid in first two years

Introducers fee: Refer to lender

Tel: 0500 050020

The max 130 deal has a 0.31 per cent discount over two years and allows for loans up to 130 per cent of valuation.

London & Country mortgage specialist James Cotton points out that it is designed for first time buyers struggling to get on the housing ladder and those looking to consolidate other debt.

Comparing the rate with standard schemes, Cotton feels max 130 is high but not surprising due to the risk the lender is taking. He says: “The discount is just 0.31 per cent, giving a current rate of 6.24 per cent. There are early repayment charges for the first two years and there is the option to make overpayments.”

Cotton says there is no denying the problems first time buyers face but feels much of their struggle is due to the cost of houses, following steep price rises, compared to their income. He says: “The ability to borrow more than the value of the property will not solve the affordability problem or help these borrowers get a mortgage.”

Discussing the drawbacks of this deal, Cotton says: “It may help those who can afford the level of borrowing but have no deposit, or may reduce the outgoings of those with other unsecured debt, but the risks are considerable.

“As all borrowing is secured against the property, those borrowing more than 100 per cent of the property value will put themselves into negative equity from day one. This is a fairly risky move at any time, and with house prices are cooling or showing a fall in some areas, borrowers could find themselves with little room to manoeuvre.” He warns that selling the property or remortgaging could be difficult unless there is a considerable rise in the propertys value.

Cotton thinks it is difficult to make direct comparisons between this and other deals because there are none around that offer this level of secured borrowing. He cites Coventry and Northern Rock as lenders who offer up to 125 per cent of valuation, but only 95 per cent is secured, while the rest is made up of a personal loan.

BROKER RATINGS

Suitability to market: Poor
Flexibility: Poor
Competitiveness of mortgage rate: Poor
Adviser remuneration: Average

Overall 4/10

Recommended

How to benefit from the DNS

It was good to see that January 14 came and went and the world didn’t end – the relief felt was similar to that of the millennium bug when it failed to mat-erialise. Of course, with something like regulation, D-Day isn’t the end of the story. Now’s the time when we have to start changing the way we work and real-ise where the potential regulation minefields are.

Man grows hedge fund stable

Man Investments has established Man Glenwood equity opportunities, a multi-manager fund of hedge funds that offers exposure to hedge fund managers specialising in long and short equity strategies.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com