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‘Niche first-time buyer mortgages undersold due to lack of adviser knowledge’ – poll result

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  • 27/11/2018
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Legal charge and savings account linked mortgages are likely to be undersold due to a lack of knowledge from advisers.

 

Mortgage Solutions’ latest poll, sponsored by Post Office for Intermediaries, polled brokers on the niche first-time buyer mortgages they have placed the most of.

Around 45% said joint borrower, whilst two per cent and three per cent of brokers replied legal charge on parent’s property and savings account security-backed, respectively.

The biggest slice of the brokers polled, or 48.9% chose none of these options.

There are 35 guarantor mortgages available within the market, where 12 require a supporting charge over a property and 13 require a supporting charge over cash in a savings account, figures from Moneyfacts revealed.

According to Moneyfacts data, all products are available to joint borrowers, standing at 5,239.

Jonathan Clark, mortgage partner at Chadney Bulgin, said that although lenders have come up with some very clever ways of assisting first-time buyers with little or no deposit in the last few years, legal charge and savings account are not easy for all brokers to fully understand.

He added: “They also work better if all parties are present at an initial meeting, and these can sometimes prove tricky to schedule.

“Finally, there are lingering fears that HMRC may treat them as a second property purchase (and apply the higher rate of SDLT as a result) in the future where parents have supplied a deposit and could therefore effectively have conferred ownership rights to the property.”

Dominik Lipnicki, director of Your Mortgage Decisions, said that the poll result is not surprising and it stems from a lack of knowledge from advisers.

He said: “Advisers should offer all the available options thinking outside the box. It will improve sooner or later, but it is a long process.”

However, David Hollingworth from L&C Mortgages said that brokers have a decent knowledge of legal charge and savings account products, but there is less awareness from the consumer’s point of view.

He added: “However, these results have showed that there is still innovation in the first-time buyer market.”

Alex Smith, mortgage adviser at Capricorn Financial Consultancy, said that the joint borrower is the most common option offered by high street lenders.

“The joint borrower is the only guarantor mortgage where the parents are not named, therefore they do not pay an extra 3%, according to the stamp duty changes of some years ago.”

 

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