First-time buyers now offered 100pc mortgage
First-time buyers desperate to get on the housing ladder can now apply for a new 100 per cent mortgage.
The Bath Building Society has launched the three-year fixed-rate mortgage, called the Parent Assisted Mortgage Scheme (PAMS), in an attempt to open the housing market to potential young buyers who cannot afford the high deposits required by many lenders.
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Bath Building Society chief executive Dick Jenkins promoting the new mortgage offer PICTURE: Lloyd Ellington
The mortgage will allow first-time buyers to borrow up to £300,000.
The PAMS mortgage requires the parents of the buyer to provide a guarantee for the loan, and the society takes a charge over a proportion of the parents' home.
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Society chief executive Dick Jenkins claimed the 100 per cent loan made sense.
He said: "The 100 per cent PAMS is intended to open up home ownership to a wider demographic in a responsible, sensible way, giving young people the opportunity to enjoy the benefits of home ownership just as their parents did.
"This is also a sign of confidence that the housing market is starting to slowly recover and that first time buyers will be a part of that recovery."
First time buyers are now facing an eight-year wait to save a deposit large enough to get on the property ladder, with 60 per cent asking their parents for financial help.
Mr Jenkins said: "The bank of mum and dad has become a significant factor in the mortgage market over the last few years."
Mr Jenkins insisted the new 100 per cent mortgage would not cause the same irresponsible lending which contributed to the recession.
He said: "Let me be clear, this is not a return to the indiscriminate 100 per cent lending that was in vogue on the eve of the credit crunch. We will be assessing all applicants carefully to make sure the deal is right for them and that they are comfortable with how the mortgage works.
"On the experiences Bath Building Society has had so far, I don't think this is unduly risky. The bond between parents and their children works in such a way that nobody wants to extend themselves beyond what they can afford."
3 Comments
by MoeXXX
Thursday, February 28 2013, 9:23PM
“If you need a mortgage *at all* you can't afford the property. That's kindof the point of a mortgage.
What's a sensible load-to-value ratio then? 95%? 50%? 0%?”
by a1rhella1r
Thursday, February 28 2013, 12:04PM
“Absolutely. You should only be able to buy property in bath if you are rabid right-wing, drive everywhere in an oversized car and belong to the overwhelming demographic that makes 98 per cent of the population...”
by mcupis
Thursday, February 28 2013, 11:31AM
“Have people learnt nothing from the financial disaster of the last ten years?
If you need a 100 per cent mortgage, you can't afford the property. If you hock yourself up in this level of debt there is a very real chance that it can all go wrong and you can lose everything.”