Product innovation is welcome

Product innovation is once again at the top of my news column this week.   A company has launched a very interesting proposition for those in the Buy to Let mortgage sector.  They will allow a 20% equity withdrawal opportunity.  This can be for any legal purpose and there are no monthly repayments.  Instead, this amount is repayable on the sale of the property and any increase in property value shared with the lender.  They will allow the total loan, including the amount with the first charge lender to a maximum of 85% of the property value.   Already this has created a lot of interest by those looking to buy further properties wanting to release funds for the deposit by raising monies on existing property.   Obviously T&Cs apply, but this is another example of lenders looking to be niche suppliers!

The Nationwide House Price index has reported that UK house prices increased by 1% on October and were 5.8% higher than October 2012.  They further report that house prices, at a national level, are only now around 7% lower than they were in the height of 2007.  Confidence boosting news!

And it is so across the market.  Rates are still decreasing!  Especially in the Near Prime sector for those who have had previous financial issues with their credit.   Many lenders are in this arena and they will cater for a missed mortgage payment in the last 12 months, historic defaults, County Court Judgements (CCJs).  A limited few will also consider those who are discharged bankrupts, had IVAs or who are in a debt management plan.

There’s no denying that this area of the market took a battering back in 2007 as many, many lenders who offered these types of mortgages were shut down or mothballed.  However, the regulatory lending restrictions are now more stringent than back then and the new breed (some never really left) have a whole new outlook on the term ‘responsible lending’. But where there is demand, there will always be supply.  Rates range from late 3%s, right up to double figures depending on individual circumstances.   

Finally, the Near Prime lender tends to be a ‘stepping stone’.  Most issues usually disappear from a credit search after a few years. Therefore, the aim would normally be to cater for current requirements on a short to medium term basis with the longer term outlook being structured to enable the customer to get back onto high street mortgage offerings, as quickly and cost effectively as possible.  Terms and conditions always apply and always best to seek professional advice.