Skipton returns to FTB market with 95% LTV deal
Skipton Building Society is going against the market trend and increasing its Loan to Value to 95% under a new scheme to help first-time buyers called "Mutually Exclusive".The scheme will launch on Monday 15 September 2008.
The last week saw another lender reduce its LTV; Alliance & Leicester now requires borrowers to raise a 15% deposit. Skipton's new mortgage scheme, Mutually Exclusive, sees the Society return to the first-time buyer market and allow lending of up to 95% LTV.
How it Works
The Mutually Exclusive mortgage will allow first-time buyers to borrow a higher LTV by rewarding their or their family's membership of the society and commitment to saving with the Society. This sees a return to ‘normality' in the approach to mortgage lending - a direct link between a savings commitment and the availability of mortgage finance, a reciprocal arrangement that embodies the mutual ideal.
For many first-time buyers raising a deposit of 10-20% is a barrier to getting on the housing ladder rather than affording monthly payments. Where a first-time buyer can only raise a 5% deposit but has family who would like to help them buy their first home, the Mutually Exclusive mortgage works by taking a charge against savings held with the society by the family.
Mutually Exclusive sets Skipton apart from other lenders by not requiring family to pay part of the deposit in order to meet any gap in savings. Instead, their savings are invested at a competitive rate of interest as a guarantee against the loan, meaning they continue to grow while providing security.
Key features:
Skipton will lend up to 95%, subject to standard lending criteria and sufficient investments with us in a Mutually Exclusive Account.
There will be no restrictions based on tenure of membership. The benefit may be given to a family member of a new investor, provided they have the level of investments required.
The amount of savings under charge will be calculated from 75% of the property value, e.g. on a £100k property, if the applicant requires 95% LTV, Skipton will take a charge against £20,000 of savings.
Funds under charge must be invested in a Mutually Exclusive Account, currently paying 4.85% Gross.
No withdrawals can be made against the money while the charge is in place. Money may be transferred out of existing Skipton accounts into this account without penalty.
The charge remains in place until the loan is repaid or revised to reflect a change to the equity position.
There is no Higher Lending Charge for customers to pay.
Standard mortgage product range is available for this scheme; products previously available to 90%
LTV will now be available up to 95% LTV for Mutually Exclusive borrowers.
Borrowers will also benefit from the lowest price fixed rate mortgages available at 95% with no Higher Lending Charge.
The scheme will be for purchase business only through Skipton's branches.
Mortgages must be on repayment only.
Commenting Steve Haggerty, MD of Skipton Building Society said, "Mutually Exclusive rewards membership and reflects a link between savings and lending that has been missing from the market for too long.
"By doing what a mutual does best, we have been innovatively traditional. This is a new take on the long-standing idea of parental or family support for first-time buyers; one that not just helps the borrower to get on the housing ladder but looks to remove the need for family to draw-down on their own savings.
"At a time when other lenders are abandoning first-time buyers, we are actively seeking ways to support them. First-time buyers are the life-blood of the market, without them it cannot operate properly. This is a substantive move to help first-time buyers, who have been failed by recent Government announcements."