Borrowers urged to focus on true cost

Borrowers should focus on the true cost of loans and keep falling house prices in mind, says Mform.co.uk.

The consumer finance site has found some scarce 95% LTV deals that are still available.

But it is warning borrowers who take advantage of the deals to account for all fees, monthly repayments and the possibility of negative equity when choosing a mortgage product.

Francis Ghiloni, marketing and business development director for Mform.co.uk, says: “The focus of the mortgage market has switched to availability with lenders pulling products and raising rates at short notice.

“Borrowers who need loans of up to 95% LTV can still secure competitive deals but the choice is restricted with some major lenders cutting back to 90%.”

He adds: “Borrowers who have substantial equity in their home or high deposits are in a stronger position but that should not mean people without substantial deposits should take the first mortgage they can get.

“They should be focussing on the true cost of their loan taking into account all fees as well as the monthly repayments. And with house prices falling there is a real risk of negative equity for anyone taking a 95% mortgage and anyone doing so should compare the deals carefully.”