First time buyers who have been unable to raise enough money to pay the deposit on a contractor mortgage might be interested to learn about a 100% home loan from Aldermore.
The bank is offering a 100% three year fixed rate mortgage at 6.48%. Aldermore’s Family Guarantee Mortgage will be available to first timers and people over the age of 25 who are moving home. However, it requires a family member to guarantee the final 25% of the loan using their own home as collateral.
Aldermore is the first bank in England and Wales to offer a deposit free home loan. In August, Northern Bank from Northern Ireland began offering people the opportunity to purchase a home without needing any savings.
Critics of the deposit free mortgages say they are irresponsible, over inflate the rental market and could put young people in financial difficulties. Supporters, on the other hand, say they are one of the few ways first time buyers can achieve their dream of homeownership.
Charles Haresnape, the MD of Aldermore, said large deposits have disfranchised first timers from the housing market and unless this is addressed the housing market will have little chance of recovery.
Most lenders are happy to accept deposits that have been gifted by family members but the Family Guarantee Mortgage gives them much greater flexibility. Guarantors will still retain their savings and provide a guarantee instead.
The maximum loan size has been set at £250,000 and there is a non-refundable £299 booking fee to pay plus a £999 completion fee.
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