Charcol targets first-time buyers with fixed rate deal

Charcol is offering borrowers an enhanced income mortgage deal, with a fixed rate of 4.19% (5.0%APR) until September 2 2008.

The MIG-free deal carries a redemption penalty for the same period as the fix, but borrowers can repay up to 10% of the loan penalty-free each year. The deal requires a minimum deposit of 10% and allows up to five x single, or 4x joint annual income to be borrowed, thus increasing the purchasing power for many applicants.

Due to the high income multiple applicants must have a suggested minimum income of £35,000 or, in the case of joint applicants, a suggested minimum joint income of £50,000.

The minimum salary has been set as a guideline because the lender will also take into account affordability and the results of the credit reference search, both of which have to be good.

Ray Boulger, senior technical manager at Charco, says: “We have been exploring ways to help first-time buyers and those looking to trade up or remortgage who can afford and sustain a larger mortgage than most lenders will offer. This mortgage offers a competitively priced five-year fixed rate to borrowers with an above average income and a deposit of at least 10%.

“The five-year fixed rate provides comfort to both borrower and lender that the mortgage will not suddenly become unaffordable if rates increase. Likewise borrowers with an above average income who choose to do so can safely afford to allocate a higher proportion of their income to buying their home as their other essential spending doesn&#39t need to increase in line with their higher income.

“This mortgage offers an excellent and affordable solution for those who make a lifestyle choice to allocate more of their income to buying their home.”

The average age of first-time buyers is now 33 and although more movers will qualify for this mortgage than first-time buyers a significant minority of first-time buyers will also meet its minimum income requirements.