Headlines that contain the words ’100% LTV mortgage’ are always going to guarantee a certain degree of interest because such products are scarce.
I have to admit I was immediately drawn to the story of Aldermore’s 100% LTV product because you don’t get many of them to the pound these days.
Of course, 100% LTV in this case is 75% LTV plus a guarantee on a parent or grandparent’s property for anything up to 100% LTV.
Cynics might suggest this is not really 100% LTV lending and is just smoke and mirrors. I disagree with this opinion as while this is clearly not traditional 100% LTV lending, it is a good example of a sensible take on the problem potential borrowers face.
To my mind lenders are damned if they do and damned if they don’t when it comes to funding higher LTV products. Brokers and their clients would happily see a flood of such products but there is a lot to be said for responsible lending.
With house prices as they are we must question whether potentially placing a borrower immediately into negative equity is right. Or should the advice be for them to save more for their deposit?
Products such as Aldermore’s have limited appeal but borrowers who would otherwise not have been able to buy will be able to, as long as they have a generous parent.
Lenders are looking for solutions and we should not criticise them for trying to be responsible at the same time. Better this kind of innovation than no innovation at all.