News2 mins ago
95% mortgages
5 Answers
Does anyone still do 95% mortgages?
Will they ever?!
Will they ever?!
Answers
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Well I have just typed '95 % mortgage' into google and got lots of hits, eg
http://www.95mortgages.co.uk/
http://www.mortgagesorter.co.uk/types_mortgage s_95.html
http://firstrung.co.uk/articles.asp?pageid=NEW S&articlekey=9481&cat=44-0-0
http://www.95mortgages.co.uk/
http://www.mortgagesorter.co.uk/types_mortgage s_95.html
http://firstrung.co.uk/articles.asp?pageid=NEW S&articlekey=9481&cat=44-0-0
Probably a headline 'come on' F30 - to get you interested in their organisation, then you end up being a 'special case' who only merits an 80% loan/value.
There are two reasons why these won't return anytime shortly (at reasonable terms):
1) Property values may yet fall back further
2) Owners who have put more into their property in terms of personal equity are statistically more likely to have a vested interest in making it work, rather than chucking back the keys at the first sign of difficulty.
Both of these factors relate to risk and risk management. Lenders won't lend unless they have a good understanding of the specific risk (or risks) and know how to mitigate them. Worse than this, the media are completely hopeless at explaining risk in simple terms to the public. They want everything 'digital ' - either full on or full off. Take the (unrelated) pathetic attempt to report the BBQ Summer' - as predicted by the Met Office. They never said it would happen - just that there was statistically a two to one chance of it being good.
Sorry about that - I digressed.
Lastly, IF you are able to find a lender willing to give you a 95% mortgage, they will do it at relatively expensive interest rate terms. Nothing underhand about that - simple reality of investment - lenders want a bigger return for a higher risk - that way they can still get their total money back allowing for the fact that (statistically) more 95% punters will default. The defaulters subside the rest of us.
So if you are a less-good risk - you pay more.
There are two reasons why these won't return anytime shortly (at reasonable terms):
1) Property values may yet fall back further
2) Owners who have put more into their property in terms of personal equity are statistically more likely to have a vested interest in making it work, rather than chucking back the keys at the first sign of difficulty.
Both of these factors relate to risk and risk management. Lenders won't lend unless they have a good understanding of the specific risk (or risks) and know how to mitigate them. Worse than this, the media are completely hopeless at explaining risk in simple terms to the public. They want everything 'digital ' - either full on or full off. Take the (unrelated) pathetic attempt to report the BBQ Summer' - as predicted by the Met Office. They never said it would happen - just that there was statistically a two to one chance of it being good.
Sorry about that - I digressed.
Lastly, IF you are able to find a lender willing to give you a 95% mortgage, they will do it at relatively expensive interest rate terms. Nothing underhand about that - simple reality of investment - lenders want a bigger return for a higher risk - that way they can still get their total money back allowing for the fact that (statistically) more 95% punters will default. The defaulters subside the rest of us.
So if you are a less-good risk - you pay more.
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