ESPC revives 100% mortgage in deal with Bank of Ireland

The Edinburgh Solicitors Property Centre (ESPC) has linked up with Bank of Ireland to offer low-cost access to the bank's 1st Start deal, a guarantor mortgage.

Under the scheme, a parent or a relative agrees to guarantee the mortgage in the event of failure to make the repayments. As soon as 5 per cent equity is secured, the guarantors can come off the mortgage.

The new deal is being offered in the wake of a dramatic decline in the mortgage market this year. Abbey's announcement last month that it was ditching its 100 per cent deal was heralded as the end of deposit-free mortgages.

But the ESPC has come up with the Bank of Ireland deal – the last remaining 100 per cent mortgage in the UK – for first and second-time buyers who have taken advice from the groups's independent financial advice arm.

The advice process includes an affordability assessment and evaluation of a buyer's sensitivity to interest-rate movement.

Under the agreement, the Bank of Ireland will waive mortgage arrangement fees, usually 799, while the ESPC will not charge the 250 advice fee.

Conveyancing fees are also fixed at a reduced rate of 499 plus VAT.

"This will make a big difference for a lot of first-time buyers that do not have the extra money for peripheral mortgage costs," said Leslie Canavan, general manager of ESPC's money management division.

"It gives first-time buyers a better chance, because there are plenty of properties on the market."

The mortgage is available over three or five years at a rate of around 7 per cent and over, said Canavan.

John Postlethwaite, principal at independent financial adviser Punter Southall Financial Management, in Edinburgh, welcomed the initiative.

"The fees are just one of a number of considerations for first-time buyers, but anything encouraging people into the market, as this will, is good to see," he said.

The number of mortgages approved for home buyers has fallen by nearly half in the last 12 months, to its lowest since the Bank of England started collecting such data 15 years ago.

First-timers' fading fortunes

THE proportion of property sales accounted for by first-time buyers fell in April for the third month in a row, the National Association of Estate Agents has revealed.

Its members reported a drop from 8.3 per cent in March to 7.7 per cent last month in the share of the housing market taken up by first-time buyers.

The figure was down from 10.3 per cent in the same month last year and the 12-month high of 14.5 per cent level recorded in January. The NAEA attributed the fall to the difficulty experienced by first-time buyers in securing mortgages.

It said a squeeze on mortgage approvals hit the confidence of first-time buyers. But there was stability in the number of sales agreed, the number of viewings before a sale was secured and the average difference between asking and sales price.

"It is apparent that some people are adopting a wait-and-see approach, watching the market before making any decisions," said Chris Brown, president of the NAEA. "Many, especially first-time buyers, will be feeling the credit crunch and tighter lending, leading to them being unable to move on to the ladder or up the chain."

FACTBOX

THE proportion of property sales accounted for by first-time buyers fell in April for the third month in a row, the National Association of Estate Agents has revealed.

Its members reported a drop from 8.3 per cent in March to 7.7 per cent last month in the share of the housing market taken up by first-time buyers.

The figure was down from 10.3 per cent in the same month last year and the 12-month high of 14.5 per cent recorded in January.

The NAEA attributed the fall to the difficulty experienced by first-time buyers in securing mortgages.

It said a squeeze on mortgage approvals had affected the confidence of first-time buyers in the property market, making them more cautious and hesitant.

But there was stability in the number of sales agreed; the number of viewings before a sale was secured and the average difference between asking and sales price.

"It is apparent that some people are adopting a 'wait and see' approach, watching the market before making any decisions," said Chris Brown, president of the NAEA. "Many, especially first-time buyers, will be feeling the results of the credit crunch and tighter lending, leading to them being unable to move on to the ladder or up the chain."