Lenders sweet on 40% deposit holders
by Gill Montia
New research from fool.co.uk shows just how dramatically the mortgage market has swung in favour of those who have large deposits.
According to the financial website, home buyers looking for a loan-to-value (LTV) ratio of 60% can access around 4,588 mortgage products.
For those even better placed and needing to borrow less than 60% of their property’s value the choice of home loans rises to 4,620.
However, home buyers with a 25% deposit will find that mortgages offering 75% LTV number only 3,360 and those with a 5% deposit, seeking an LTV of 95%, have only 70 mortgage products to consider before completing their application forms.
Fool’s head of personal finance, David Kuo, says the research is the ultimate proof that banks like to lend money to people who need it least.
He also suggests that homeowners now have the opportunity to exploit weaknesses in the property market by upsizing, especially if the amount of equity in their homes allows wide access to the home loan market.
Mr Kuo also points out that borrowers do not have to rely on rising property prices to shrink their loan-to-value ratios; they may choose to increase monthly mortgage repayments instead.
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