Re:locate magazine, winter 2006/7

Launch of the ‘Super Mortgage’

Britain’s second largest mortgage lender Abbey made news in early November 2006 when it announced a scheme to lend up to five times borrowers’ joint incomes. In reality, however, strict conditions mean that few borrowers will actually qualify for such high loans. For instance, applicants must have an annual income of at least £60,000, must have excellent credit ratings and must have deposits equal to a quarter of the purchase price. With property prices having trebled in the past decade, increasing numbers of would-be home-owners are tempted by such deals. The concern, though, is that those who overstretch themselves financially could either be left with negative equity if house prices fall or – in a worse case scenario – could lose their homes altogether. With so many people struggling to get their feet on the first rung of the housing ladder, mortgage lenders are being forced to think creatively. Recent reports have also revealed that, in a move to make situations easier for first-time buyers, seven lenders had increased their loan-to-value rates (the amount they’ll lend in proportion to the value of the property), meaning individuals can pay a smaller deposit on their homes.

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