Lender offers 100% re-mortgaging deals

Existing customers with Coventry Building Society whose mortgages are approaching renewal are being offered a new rate of 4.99%, worth up to 100% of a property's loan-to-value (LTV), fixed for five years.

The building society is the first lender to offer such a deal - which also comes with no booking or arrangement fees - offering hope to its mortgage customers who are in negative equity (i.e. owe more on the mortgage than the value of the property).

Before this new product was unveiled, Coventry Building Society customers who took out mortgages of up to 125% of the value of their home would have had no choice when their mortgage came to an end, but to revert to the mortgage provider's standard variable rate (SVR) of 4.74%.

Due to the fact that all other mortgage lenders are currently requesting equity of no less than 10% before granting approval on a mortgage deal, households in negative equity are unable to obtain a deal with any other provider.

Aaron Strutt, a mortgage broker with Chase De Vere Mortgage Management said that the new product from Coventry Building Society was "great news" for the lender's customers, explaining that property owners who owe more on their mortgage than the value of their home, have been frozen out of the mortgage market and are being forced onto their lender's standard variable rate.

"SVRs may be low at the moment, due to the base rate falling to 1%, but they will inevitably go up again, which could mean large increases in borrowers' monthly repayments," he added.

"The opportunity to fix at a rate of below 5% will be welcome and provide some much-needed peace of mind."

Source: Times Online | Last updated: 18th February 2009

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