A remortgage option for borrowers with limited equity in their home is being launched by Accord Mortgages.
The lender is now offering loans of up to 95% of a property’s value in a bid to support homeowners who want to improve or extend their home rather than move.
The high loan-to-value (LTV) product also been suggested as a potential solution for those remortgaging for the first time and need help paying off a Help to Buy equity loan.
Currently Accord offers remortgages of up to 90% LTV but it said there might be some borrowers, such as first-time buyers coming to the end of their introductory deal, who haven’t paid off enough of their mortgage to qualify for this rate. The latest product will mean those with only 5% equity in their home can refinance their home.
Increasing choices
Jemma Anderson, mortgage manage at Accord Mortgages, said there had been a limited choice in this market for some time and she hoped this would provide more options for borrowers.
What’s more, with the housing market cooling and buyers potentially waiting to see how they’re impacted by Brexit, existing owners may be thinking more about extending or improving rather than moving.
She added: “By increasing our maximum LTV we’re giving borrowers greater flexibility to achieve what they want without necessarily buying a new home.
“It could also help borrowers with a Help to Buy mortgage repay their equity loan or simply support those maturing for the first time who haven’t paid off enough of their mortgage to be able to remortgage at 90% LTV.”
These remortgages include cashback on completion, free standard valuation, free legal fees or low or no product fees.
The lender’s lowest remortgage rate at 95% LTV is a two-year fixed rate at 3.31%. This comes with £500 cashback and a £495 product fee. A fee-free two-year fixed rate is also available at 3.54%.
Borrowers looking to fix their rates for longer could instead choose a competitive fee-free five-year fixed rate at 3.79%, with £250 cashback. Alternatively a five-year fix at 3.69% is available with a £495 product fee and £250 cashback.
The new range will be available for straight remortgage and capital raising, and has a maximum loan value of £500,000.
Interesting read about remortgages.