Aldermore to launch alternative to Family Guarantee
Mortgage Introducer can reveal that the challenger bank is planning the move for Q1 2013 in a bid to drive its residential mortgage business forward in the new year.
Managing director Charles Haresnape said: “We are giving more choice to the bank of Mum and Dad who are heavily relied upon to provide the deposit for their children’s first home. We’re offering them the option to deposit their savings with Aldermore to provide security for their children’s 100% loan to value mortgage rather than adding a charge to their home.”
The as yet unnamed product follows the same principles as the Family Guarantee Mortgage whereby first-time or second-time buyers can obtain a 100% LTV mortgage if their parents stand as guarantor. But the new product only requires savings to the value of 20% of the value of the property. At the moment the Family Guarantee Mortgage requires a charge to the value of 25% to be placed on the parents property.
Haresnape said Aldermore would insist that both parties received independent legal advice to ensure it was the right decision for all and after seven years the parent’s deposit would be released from its “ring fenced” account.
The mortgagor will be able to request the instruction of a valuation as the mortgage term progresses, at their own expense, so that if the value of the property has increased the savings held by Aldermore can decrease proportionately.
Haresnape also said the bank plans expand its mortgage lending into in Scotland in quarter one.