Vida launches 3% deposit mortgage range
Vida Homeloans has launched a range of 97% loan-to-value mortgages designed to help borrowers get on the property ladder with a 3% deposit.
The specialist mortgage bank's new ‘3 & Easy’ products have been designed to help long-term renters and first-time buyers get a foot on the property ladder or begin to move up the chain.
The lender offers a choice of five- and seven-year fixed rates, starting from just below a rather high 7.50%, and there is a £995 arrangement fee to access the most competitively priced rates. The products are available to employed and self-employed borrowers, applicants with some adverse credit, those with complex or second job income, and contractors.
There is also a potential loan term of up to 45 years, assisting customers even further with affordability. Part of the mortgage is available on interest only; the minimum loan size is £50,000, and the maximum loan size is £750,000.
Aaron Strutt, product director at Trinity Financial, says: “The rates are not cheap, but there are not many mortgage options available to borrowers with really small deposits of less than 5%. These rates are available for property purchases and remortgages, which is quite unusual.
"Many low- or no-deposit mortgages are available to borrowers with a track record of renting and first-time buyers. Accord Mortgages has a 1% deposit mortgage, and Skipton has a no-deposit mortgage available to renters. TSB has also just launched a 5% deposit mortgage with renters, and landlords are willing to give 5% equity when they sell to their tenants."
Does taking Vida's 3% deposit mortgage at such a high rate makes sense?
Before borrowers opt for a rate like this, they need to make sure there are no alternative and cheaper options, or they can’t get a bigger deposit by saving up for longer or tapping into the Bank of Mum and Dad.
If you are willing to pay nearly 7.5% for a mortgage, you will probably take a smaller mortgage, which will help borrowers in some areas with lower house prices. After five years, borrowers can switch lenders without paying an exit fee, and hopefully, they can get a better rate, providing they have at least 5% equity in the property.
This deal is designed to get people who want to get on the property ladder when they have a minimal number of alternatives.
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation
The information contained within was correct at the time of publication but is subject to change.
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