95% Mortgage Deals – Are they real?
With High LTV mortgages making a comeback, it seems that the mortgage market may be experiencing a recovery, as well as Skipton Building Society offering high loan to value mortgages there are nearly 40 lenders launching similar products, over twice as many as last year, this is good news for the self employed who have struggled to get a mortgage more recently. Skipton’s product offers a mortgage with rates from 5.69% - 5.49% with a maximum loan of £250,000. But the real coup de gras is their 2 Year Fixed Rate Mortgage at 95% yes 95% at a reasonable 5.99%.
While these mortgages do make you think that the mortgage recovery is on its way we must be careful. Firstly this mortgage may be on the lenders website for you to apply too, there is the possibility that these are here just to entice an application, shortly followed by a sales pitch!!
The Council of Mortgage Lenders announced that gross lending for Q4 2009 was £41bn, 2010 had seen a considerable loss of £7bn on the previous year, so time will tell whether these high LTV products are going to have an effect.
There has been no significant increase in house prices in the last few months, the rise has been less than 1% and shows no sign of getting better. So it seems likely that these high LTV products are merely decoration for there more secure mortgage deals.
With house prices not likely to rise, high LTV mortgage may see investment possibilities limited; house prices are meant to go up to at a reasonable rate as to raise equity in the property, paying nearly 6% on your mortgage payments in not going to help.
But in the end while there are a few products on the market the average LTV for a property is still only just over 60%, as lending restrictions haven’t changed the criteria for successfully attaining a mortgage is still strict and lenders don’t want to take any chances. This is a real problem as lenders are being encouraged to lend more money to first time buyers.
So in summary don’t think that you can go out and get a high LTV mortgage tomorrow, the chances are that disappointment lays in your way and it is much more realistic to hold back and keep saving, we are bound to have a rubbish summer so stay in and save your money.