Sue Cox is business manager at Bananas Inc
“There are not many lenders willing to go to 95 per cent loan-to-value (LTV) on self-cert and those that do are not cheap.
Assuming Derek is remortgaging or a second-time purchaser, CHL Mortgages is worth considering and, at 95 per cent LTV, it offers rates from 6.35 per cent fixed and Bank Base Rate plus 1.30 per cent for a tracker.
CHL recently upped its lending limits to those wanting self-cert. It goes up to £342,000 at 95 per cent LTV, so Derek’s lending requirement, which is not mentioned, should be covered.
No higher lending charge (HLC) is applicable across CHL’s self-cert range, which fits in with Derek’s aversion to HLCs and no accountant’s questionnaire or proof of income is needed.
Advantage has also got a 95 per cent product with no HLC, starting at 6.39 per cent for a three-year fixed option. It has a 1.50 per cent completion fee and a revert rate of LIBOR plus 1.95 per cent.”
Pauline Hibbert is a consultant for Mortgage Shop franchise, Mortgage Options
“I would advise Derek to raise another 5 per cent deposit so there would be more deals available to him.
If this is not possible, I would discuss his priorities with him, as there are no 95 per cent self-cert products available without HLCs or ERCs. If he has no plans to move in the next couple of years then a short-term fixed rate with ERCs during the two years would be acceptable.
The best mortgage deal available is with Advantage Home Loans. There are no HLCs or extended tie-ins. I would advise the two-year fixed rate, which has two options – an interest rate of 6.49 per cent, with an arrangement fee of 1.50 per cent, and an interest rate of 6.99 per cent, with an arrangement fee of £799. Advantage Home Loans will not allow fees to be added above maximum LTV so if Derek wants to keep set-up fees low, he should opt for the 6.99 per cent rate.”
Andy Frankish is managing director of Mortgage Talk
“Derek’s options will be limited, as self-cert deals are thin on the ground at 95 per cent LTV. If he was able to raise an additional deposit, he would be better placed to take advantage of some more competitive products at a 90 per cent LTV rate.
With Derek’s stipulation that he does not want to pay HLCs nor accept an extended overhanging redemption, there is really only one product on the market that will fit the bill for him, with Capital Home Loans, although this carries an arrangement fee of well over 1 per cent. As such, Derek will be penalised if he sells the property in the shorter term.
Other deals are, of course, available, but they are subject to tie-ins until the end of the deal period.
In reality, the rates at this end of the market will not be the most competitive, but Derek must be made aware that lenders will price products to reflect the perceived risk he poses as a borrower.
