The MarketPlace at Bradford & Bingley is offering a five-year stepped fixed-rate mortgage with up to five times income, aimed at key workers and young professionals.
The product, from Portman Building Society, has been designed to assist those workers who have been unable to gain a step on the property ladder in the early years of their career.
The interest rate starts at a competitive fixed rate of 4.95% and increases by 0.5% per annum during the fixed period. The stepped fixed rate starts at 4.95% and rises to 6.95% in the fifth year. Up to five times single income or four times joint income is available, up to maximum loan to value of 90%.
There is an arrangement fee of £300, no extended tie-ins beyond the fixed period, free MIG, and the ability to repay 5% of capital per annum penalty free. There is a minimum income requirement of £20,000 and borrowers must provide a 10% deposit.
Ian Darby, group commercial director at Bradford & Bingley, says: “The well documented recent surge in house prices has made it difficult for many first time buyers to get into the property market. The MarketPlace recognises this problem, and also the sensitivity of providing a mortgage where the income multiple is higher than normally offered. However, subject to affordability, this product provides the potential for young professionals and key service workers such as policemen, teachers and nurses who have been particularly hard hit by recent increases in house prices, to get a foot on the ladder.
“Although house prices have reached record levels, affordability remains strong given the low interest rates currently available. The launch of this product means that borrowers can obtain sufficient borrowing to meet their needs with the peace of mind that their rate is fixed at a highly competitive rate for five years, enabling them to budget their monthly outgoings over the medium term. There has been criticism that many younger borrowers are in danger of over extending themselves, particularly in view of the situation that developed in the late 80s when borrowing was high and interest rates rose dramatically. This product is available only after taking face-to-face advice where affordability, both now and in the future, can be assessed and clearly spelt out to the prospective borrower, reducing much of the risk factor.”