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Our clog for this week, sorry blog…..is that Dutch Mortgage Lender ‘April’ has announced that it plans to introduce a wait for it…..a mortgage that actually REDUCES in interest rate as the mortgage decreases (improving the overall loan-to-value ratio over the term) approved by the Financial Conduct Authority.
This product has already been launched across in the Netherlands and lots of interest is stirring in the launch that they plan to make here in the UK (expected to be by the end of March for new purchasers and remortgages).
The mortgages will have ‘fixed terms’ anywhere from 5-15 years available, which will allow them to ‘automatically’ switch into a lower loan to value rate as the homeowner pays off the loan. This ordinarily only happens when the purchaser decides to remortgage the property.
The same will happen if the property increases in value and borrowers can request property valuations during the mortgage term. Once the borrower hits the 60% LTV threshold the rate would then remain the same until the fixed term deal expires.
The starting rates are expected to be 4.99% (with no early repayment charges) but you will have to pay completion fees and application fees, where applicable. April intends to offer mortgages starting up to 85% loan to value, with talk about this potentially being increased to 95% loan to value in the months ahead.
We think that this new style of mortgage would only really suit people looking to get longer term fixed mortgages and possibly first-time buyers, only people looking for much longer term deals.
The concept of it all sounds good, but overall it might not make that much difference to monthly repayment amounts and with the Bank of England base rate predicted to fall again, this product might not take off like they think it will. And if you do then want to move mortgage lender, you might face a high charge to come out of the deal early.
Is the UK ready for 10-15 year fixed rate deals, we think not, but time will tell!
What do you think? Let us know your thoughts on our social pages.
#dutchstylemortgages #propertyinvestment #propertypurchases #scottishpropertymarket #propertymarketscotland
*Please note always seek professional independent financial advice when making any investment. This blog does not reflect any advice, just news!
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Email: info@murraypropertyholdings.co.uk
Call: 07979198280