Jump to main content of pageaccessibility informationSitemap
4 Jul 2020
Search for

Saturday November 15

News

Large deposits no longer required!

Scott Hanton, mortgage analyst at moneyfacts.co.uk comments on recent changes to LTV requirements by some of the big mortgage players:

“Hardly a day goes by without mention of the growing UK personal debt burden.  Total secured lending now tops £1 trillion , with the average household debt at £8,5771 or £50,0911 if you include mortgages.

“Particularly in the mortgage arena, Moneyfacts researchers have seen lenders relaxing their lending criteria to accommodate the growing need for larger loans. Income multiples have reached an all time high, increasing number of borrowers are opting for interest only mortgages and repayment terms in excess of 30 years are now commonplace. But most recently we have witnessed an increase in loan to value (LTV) limits, meaning that more mortgage products requiring a smaller deposit from the customer are now available.

“During September seven mortgage lenders have increased LTVs, some on selected products, with others raising the minimum LTV limit on their entire product ranges by as much as 10%.

Lender

Previous min LTV

New min LTV

Bank of Scotland

80%

85%*

Bristol and West

85%

95%

Chelsea BS

75%

85%

Heritable Bank

75%

80%

Halifax

75%
90%

90%
95%

NatWest

75%

95% *

Northern Rock

75%
85%
90%

80%
90%
95%

                        * Specific products available at 75% LTV

“This is a market reaction which recognises the struggle home buyers face when stepping on to, or up, the property ladder. Take for example a property worth £150K; the difference between a 25% deposit and one of 5% is a massive £30K - this could take years for the average consumer to save. It would take regular savings of £500 per month over five years to achieve a balance of £30k, by which time the goal posts will have shifted if house prices continue to rise.

Deposit %

Deposit £

Mortgage

Monthly payment

25%

£37,500

£112,500

£657.66

10%

£15,000

£135,000

£789.20

5%

£7,500

£142,500

£833.04

0%

£0

£150,000

£833.04

Based on £150K capital repayment mortgage over 25 years at 5%

“It is pleasing that lenders are responding to the needs of the consumer by offering a larger range of potentially better deals to a wider audience. However they know that if they hadn’t taken these measures they could have risked losing some of their market share. Helping people buy their home is important, but not at all costs, so we hope lenders keep sight of the importance of affordability and the impact that lifestyle changes can have on income levels.”

Source – Credit Action

NOTES TO EDITORS:

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

Regular Charts
We can supply you with regular weekly or one-off selection charts on many financial products including savings, mortgages, credit cards and personal loans. Our charts are independent, impartial, totally accurate and up to date. 
Please call Andrew Hagger on 0870 2250 512 for further information.

 

 

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however a fee paying option is available. Our typical fee would be �£500