A new guarantor mortgage that has been launched by The Mortgage Works – a subsidiary of Nationwide Building Society – has been described by one expert as the most innovative first-time buyer product that he has seen in recent years.
Andy Pratt, chief operating officer at mortgage broker Alexander Hall, says that while the rates on the home loan product are not as competitive as they might otherwise be, there is a good balance between “security and margin”.
The mortgage allows a guarantor to cover up to 30 per cent of the home loan, on a two-year fixed-rate deal at 4.99 per cent.
Mr Pratt states that the product could prove to be a constructive way for first-time buyers to get a foot onto the property ladder, while accepting that parents – and other guarantors – may have financial commitments of their own.
Statistics from the Council of Mortgage Lenders reveal that gross lending for home loan products declined to an estimated £9.1 billion in January 2010, marking a 21 per cent year-on-year fall from the same month in 2009.
Justin Moy