Coventry Building Society offers 100% mortgages

Published 19th Feb 2009

Coventry Building Society has thrown a lifeline to customers in negative equity after becoming the first lender to offer re-mortgage deals worth 100 per cent of a property’s value.

Coventry customers who took out loans of up to 125 per cent of their property’s value would have been forced to revert to the lender’s standard variable rate (SVR), currently 4.74 per cent, after their mortgage deal expires.

At present, homeowners in negative equity – where more is owed on the mortgage than the value of the property – are unable to secure a mortgage deal elsewhere as all lenders are now demanding equity of at least 10 per cent, or even 40 per cent for the most competitive deals.

Now Coventry is offering existing customers coming to the end of their mortgage deal a new five-year fixed-rate at 4.99 per cent worth up to 100 per cent of a property’s loan-to-value (LTV). The deal comes with no booking or arrangement fees.

Aaron Strutt of Chase De Vere Mortgage Management, a broker, said: “This is great news for Coventry customers. Homeowners in negative equity have been frozen out of the mortgage market and are being forced on to their lender’s standard variable rates (SVRs).

“SVRs may be low at the moment due to the base rate falling to 1 per cent, but they will inevitably go up again, which could mean large increases in borrower’s monthly repayments. The opportunity to fix at a sub 5 per cent rate will be very welcome and will provide some much-needed peace of mind.”

The deal is available to any existing Coventry mortgage customer, although it is mainly aimed at “MOREgage” customers who were able to take out 95 per cent LTV secured against their home as well as an unsecured loan worth 30 per cent LTV. Most of these deals were taken out in 2006 and 2007.

Source: ' Times '

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