And So It Begins.... High LTV lending to return

HAMISH_MCTAVISH

Far East lender Hitachi Capital is teaming up with Dragons' Den star James Caan to launch a new loan service for first-time buyers who are struggling to obtain a mortgage.

The new service is targeted at borrowers that are finding it difficult to meet the loan-to-value (LTV) requirements of established lenders.

Loans of up to £100,000 will be offered exclusively through estate agents via Mr Caan's estate agents' platform, Look4aproperty.com, and can be repaid over two to three years.

It will cover additional expenses such as legal fees, stamp duty costs and conveyancing, which can sometimes push the borrower over the affordability threshold.

Speaking to Money Management Aaron Turner, chief executive officer of Look4aproperty.com, said Hitachi Capital had now signed an exclusive contract to provide £1bn of funding initially.

Mr Turner added the company was also in discussions to expand the service next year to offer loans that could extend the original agreed LTV from 75 per cent of the value of the property to 95 per cent in some cases.

The news is a further shot in the arm for UK borrowers and follows Bank of China's decision to enter the market earlier in the year.

It is also indicative of the furious negotiations that are continuing to take place between distributors and lenders from the Far East and Africa.

Full product details of the loan product are due to be released on 21 September with Look4aproperty.com currently in the process of negotiating the sponsorship slot for TV drama Coronation Street.

It is the first launch from Mr Caan who promised earlier in the year to launch a series of new products to "kick start" the struggling UK housing market.

http://www.ftadviser.com/FTAdviser/Mortgages/Lenders/News/article/20090910/8e8283dc-9de8-11de-bdd9-0015171400aa/TV-Dragon-to-offer-FTB-loans.jsp

Excellent news for the housing market, and hopefully just the first of many as competition returns to mortgage lending, hopefully with some new and interesting products.

A very good concept too..... Initially a loan to cover fees and costs etc that push people over the LTV requirements.

Then from next year top up mortgage lending to raise LTV to 95% from 75%. Get a cheap loan from a major lender at 75% LTV, then another loan for the balance from these guys.

SingleSue

I thought any other borrowings was being taken into account now for mortgage applications.

Again, I could just be misunderstanding the above post, my head is not where it should be today.

HAMISH_MCTAVISH

SingleSue wrote: »

I thought any other borrowings was being taken into account now for mortgage applications.

Again, I could just be misunderstanding the above post, my head is not where it should be today.

I'm fairly sure nobody would commit a Billion pounds of lending funding to a venture if it couldn't be lent out.....

SingleSue

Well yes you would think so but I am sure I have seen reports from people applying for mortgages now being told they either have to clear credit card debts etc before the mortgage can be granted or their affordability is reduced.

Also, they have been funny on people taking loans to fund the deposit and reducing affordability there too.

PasturesNew

Loans of up to £100,000 ... repaid over two to three years.

I can see a rush for those.

Simply borrow £100k on top of your huge mortgage (when you couldn't even be 4rsed to save a deposit), then pay interest on that £100k and capital repayment at a rate of nearly £3k/month too.

Quids in I'd say!

We should all get one.

Graham_Devon

SingleSue wrote: »

Well yes you would think so but I am sure I have seen reports from people applying for mortgages now being told they either have to clear credit card debts etc before the mortgage can be granted or their affordability is reduced.

Also, they have been funny on people taking loans to fund the deposit and reducing affordability there too.

I think this loan is to overcome these problems?

It doesnt say that this is a mortgage, so I would presume the buyer will have to secure the mortgage, at say 75% LTV, and then this loan would come on top of the mortgage loan, directly to the buyer, to fund their missing 25%, stamp duty, solicitors costs etc.

So I would imagine this loan would also cover any shortfalls the buyer has because of any borrowing on cards etc they have.

That's the way I see it anyway? Doesnt seem to have anything to do with the actual mortgage product.

Just basically 2 loans for a home, instead of one, which is of course, absolutely fantastic news.

mbga9pgf

And you reckon the mortgage lenders will be complicit with this?

Bring it on. The next big crash will be just around the corner if nonsense like this goes ahead.

PasturesNew

I certainly didn't think any of them would accept any form of loan as the deposit. But what do we know ... it's the rich making sure they're all right Jack again maybe.

Or, it might be a non story, just to raise his profile for something else he wants to launch.

SingleSue

Graham_Devon wrote: »

I think this loan is to overcome these problems?

It doesnt say that this is a mortgage, so I would presume the buyer will have to secure the mortgage, at say 75% LTV, and then this loan would come on top of the mortgage loan, directly to the buyer, to fund their missing 25%, stamp duty, solicitors costs etc.

So I would imagine this loan would also cover any shortfalls the buyer has because of any borrowing on cards etc they have.

That's the way I see it anyway? Doesnt seem to have anything to do with the actual mortgage product.

Just basically 2 loans for a home, instead of one, which is of course, absolutely fantastic news.

Which the mortgage providers have been actively not liking.....they have appeared to not like people taking out loans (even from outside sources and not linked to their actual borrowing from them) to fund deposits and have been reducing the affordability accordingly.

Even borrowing from parents with no particular time to pay back is being frowned upon and being seen as a loan to be paid back and reducing affordability.

Graham_Devon

mbga9pgf wrote: »

And you reckon the mortgage lenders will be complicit with this?

Bring it on. The next big crash will be just around the corner if nonsense like this goes ahead.

I'm not too sure the mortgage company would have that much of a say. Of course, I could be wrong.

But say I want a house, it's 180k. My wages are say 35k a year, and the mortgage company give me £122,000.

I secure that mortgage. My deposit is dealth with by the solicitors, not the mortgage company, and I would assume this company would be involved with the solicitors.

I then go to James Kaan, or his company at least and ask for an additional 60k.

The mortgage is already in place and approved. The loan, comes after. A bit like mum and dad stumping up the 60k and me paying them back. The mortgage company really has little to do with that, as it's not on my credit record when I apply.

Graham_Devon

SingleSue wrote: »

Which the mortgage providers have been actively not liking.....they have appeared to not like people taking out loans (even from outside sources and not linked to their actual borrowing from them) to fund deposits and have been reducing the affordability accordingly.

Even borrowing from parents with no particular time to pay back is being frowned upon and being seen as a loan to be paid back and reducing affordability.

Interesting, I didn't know they were going to such lengths now.

Does make you wonder then how this will work!