100 Percent Mortgages 2010 – Society Offers 100 Percent Mortgages
100 Percent Mortgages 2010 – Society Offers 100 Percent Mortgages
With the market as it is, getting hold of a 100 percent mortgage is near enough impossible. That is until you start looking locally, for there are independent building societies offering this type of deal if you look carefully.
The Tipton and Coseley Building Society is offering two 100 percent mortgages to existing customers and their immediate family. These deals are being offered to those looking to purchase a property in the Birmingham, Dudley, Walsall and Wolverhampton area, or to be more precise the B, DY, WS and WV postal code areas. Whether that means the borrower has to currently live in one of those areas is a matter to take up with the society. The borrower must have a savings account with the society since at least the 1st January 2009.
The immediate family eligibility for one of these deals is defined by the society as a grandparent, parent, sibling or dependent.
The way in which the 100 percent mortgage is achieved with this lender is that there is a collateral charge on say the parental home. The could be several ways of working this out but the following would be a typical example.
The applicant wishes to purchase a property for £130,000. The home the collateral charge is going to be taken out on is worth £250,000 and there is an outstanding mortgage amount of £80,000. A typical formula to work out the calculable equity for this may be:
80% of 250,000 minus £80,000 mortgage debt = £120,000
80% of £120,000 = £96,000 which is the calculable equity
The property the charge is going to be on must have a calculable equity equal to or greater than 25% of the applicant’s loan. So in this example £96,000 is greater than £32,500 (25% of £130,000).
Because a charge is taken on the property independent legal advice is a must. If this property is sold for example the lender is automatically involved and could theoretically block the sale.
The collateral charge can be removed once the LTV of the property falls below 75% and the borrower is able to make full repayments. If the market is not buoyant the charge may stay in place for a very long time.
100 percent mortgages in detail
Fixed Rate
6.69% Fixed until 31/08/2012 reverting to 4.99% variable
Arrangement fee of 0.4% of loan amount
Overall cost comparison is 5.6%APR
Discount
0.10% Discount until 31/01/2013 currently 4.89% reverting to 4.99% variable
Arrangement fee of 0.4% of loan amount
Overall cost comparison is 5.6%APR
Check your local building society for any 100 percent mortgage deals they may have in 2010. If you have got old savings accounts, keep hold of them even if there’s only a pound in there, as you never know when the account will come in handy.
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