Mortgage broker John Charcol is looking to lure first time buyers with a new stepped tracker product, with a starting interest rate of just 4.49 per cent.
The new mortgage offers a market-leading rate of Bank of England base rate minus 0.01 per cent for the first year, and base rate plus 0.39 per cent in year two – giving a low APR of 6.1 per cent.
Moreover, the mortgage does not incur a higher lending charge (HLC) on loans of up to 95 per cent of the price of the property, and a “drop lock” facility permits borrowers to shift from the tracker to a fixed rate.
While first time buyers have traditionally been drawn towards fixed rate mortgages, Charcol believes this sector is becoming increasingly expensive.
Senior technical manager Ray Boulger explained: “With the upward movement in Swap rates over the last month or so, fixed rates really have become uncompetitive, and those that offer 95 per cent LTV with no HLC are even more so.
“This product, although not a fixed rate, does have a drop lock facility and so borrowers can move into a fixed rate should they need to at any time. Of course, the product would be good with just these features, but the rate is also highly competitive and allows first timers to pay that little bit less to start with which can be all important.”
John Charcol is just one of many companies attempting to address the needs of first time buyers, who are finding it increasingly difficult to get onto the property ladder. To read more about mortgages, click here.
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