The ‘Uni-Step’ mortgage, set up with Scottish Widows Bank, is a three-year stepped fixed rate product at 4.79 per cent until 31 October 2006, rising to 4.89 per cent until 31 October 2007 and then 4.99 per cent until 31 October 2008. Loans are available up to 102 per cent LTV with no higher lending charge or extended ties. The deal reverts to SVR, currently 5.94 per cent, for the remainder of the loan.
Applicants supported by a parental guarantee could borrow up to six times their income; 3.5 for those without a guarantor. Uni-Step also offers a refund of valuation fees up to £250 and a £150 cashback for purchases. For remortgages there is a remortgage package or £300 cashback.
Sally Laker, managing director of Mortgage Intelligence, said: “Although parents guarantor the additional income needed, they may never actually need to pay; they simply guarantor the commitment. There is no charge against the parent’s property and the idea is the graduate will be able to support themselves within three to four years and will then be able to clear the guarantor commitment.”
Murdo McHardy, senior manager business development at Scottish Widows, added: “Uni-Step is a great concept and opens the door to graduates who know they will be earning more in the future but want to live in a nice home now.”
Mike Fitzgerald, sales director of Brentchase Financial Services, said: “Anything that helps indebted graduates is worthwhile – the government aren’t helping so it’s nice to see a lender coming to the rescue. But brokers have got to spend extra time ensuring parents and applicants understand the deal.”
