Some lenders are desperate to lend. In the old days it used to be 2.75 times joint income (joint income being yours and your spouses income added together). So this restricted lending hence restricted property prices as couples couldn’t afford to buy.
This product allows a couple on a modest salary to buy something they really want.
So if a couple jointly earn £35,000 then they can buy something for £189,000 and get £47,250 to spend on doing it up!
Its products like these that keep the market rising. Do I agree with these products? Well on the face of it they seem really dangerous as couples are exposed to big increases on their mortgage payments for small increases on interest rates. Using the above example an increase of 0.50% would equate to an extra £100 per month. This is a lot to a couple who only earn £35,000.
However, these lenders have analysts that can firstly predict the market better than I could and secondly, they can also hedge their bets by going to the money market and fixing their borrowing rate.
So the consensus, by the big lenders, are that rates are heading downwards. If you wish to capitalise on the deal above then fill out this form.
Posted on: 26th Feb 2008