Added: 17 April 2018
Ipswich Building Society extends support for gifted deposits
New criteria and higher LTV allowance boost for first time borrowers
Ipswich Building Society has announced two dedicated gifted deposit products, extending its criteria around the range of family members allowed to gift under its rules and enabling access to up to 95% Loan To Value (LTV) without requiring deposits to be supplemented or matched by the applicants own funds.
Designed to provide support for would-be first-time buyers with a continuous rental history of 12 months or more, the Society’s revised gifted deposit rules take a new approach to allowing support from family members, including the applicants’ parents, step-parents, siblings, step-siblings, grandparents, step-grandparents, children, step-children, and adopted children.
The Society’s standard residential products are already available for gifted deposits up to 90% LTV, restricted to funds from parents, grandparents and siblings. Products will continue to be available on this basis for applicants meeting this criteria.
According to the English Housing Survey, one in three first-time buyers used a gift or loan from a friend or family member for their home deposit in 2017. As part of Ipswich Building Society’s commitment to providing support for those people who face the hardest challenges in accessing lending, gifted deposits can be used to make up the entire deposit contribution on its standard residential and new 95% LTV range without the requirement of the applicants own funds.
The following gifted deposits products are now available for purchase and remortgage with a maximum 95% LTV and up to £500,000 loan size:
• A 2 Year Fixed Rate of 3.45% fixed until 31 July 2020 (5.3% APRC*). A completion fee of £800, application fee of £199, CHAPs fee of £35 and a tiered valuation fee – based on property value – apply.
• A 2 Year Discount Rate at the Society’s Standard Variable Rate, currently 5.49%, with a discount of 2.60% giving a pay rate of 2.85% for two years from completion (5.2% APRC*). Whilst the product offers a zero completion fee, an application fee of £199, CHAPs fee of £35 and a tiered valuation fee – based on property value – apply.
The products feature a generous 50% fee free overpayment facility, whereby borrowers can overpay penalty free by up to 50% of the original loan amount. For overpayments in excess of this amount, or early redemption, an Early Repayment Charge (ERC) applies at 1% until two years from completion for the discount rate product, and at 3% for the fixed rate product until 31 July 2020. For overpayments this is calculated on the total overpayment amount, and for early redemption it’s calculated on the original loan amount.
Commenting on the changes, Richard Norrington, CEO, Ipswich Building Society, said: “We recognise how difficult it is for some borrowers to get on the housing ladder and our approach, based on making sensible lending decisions using expert individual underwriting, will mean that potentially more younger people and first-time buyers will be able to access the mortgage market.
“Tackling mortgage misfits, those who are under-served by the automated high street lenders, remains one of our priorities.”
The 95% loan to value gifted deposit products will be available for direct applicants across England and Wales, and via selected intermediaries. The products are priced the same as the Society’s existing 95% loan to value mortgages with both a fixed and discount option for two years.
Representative example – fixed rate product
A mortgage of £189,000.00 payable over 25 years initially on a fixed rate until 31 July 2020 at 3.45%, and then on our Standard Variable Rate currently at 5.49% for the remainder of the mortgage term would require 27 monthly payments of £945.28 followed by 273 monthly payments of £1,147.36. The total amount payable would be £339,205.84 made up of the loan amount plus interest (£148,916.84), an application fee of £199, a completion fee of £800, a valuation fee of £160, a mortgage funds release fee of £35 and a mortgage exit fee of £95. This example assumes the completion fee and mortgage funds release fee are added to the loan and that interest is charged on these fees over the mortgage term. The overall cost for comparison is 5.3% APRC representative. [This representative example is based on assumptions that the loan would start from 03 April 2018]
Representative example – discount rate product
A mortgage of £142,500.00 payable over 35 years initially on our Standard Variable Rate with a discount of 2.60% until 2 years from completion and then on our Standard Variable Rate currently at 5.49% for the remainder of the mortgage term would require 24 monthly payments of £539.83 followed by 396 monthly payments of £753.57. The total amount payable would be £311,788.64 made up of the loan amount plus interest (£168,834.64), an application fee of £199, a valuation fee of £125, a mortgage funds release fee of £35 and a mortgage exit fee of £95. This example assumes the completion fee and mortgage funds release fee are added to the loan and that interest is charged on these fees over the mortgage term. The overall cost for comparison is 5.2% APRC representative. [This representative example is based on assumptions that the loan would start from 03 April 2018]