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Mortgages. The Return Of The Mega-Mortgage. |
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Submitted by Wilhelmina Mungera
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With the housing market is now showing marked signs of recovery, especially in the South and London, the number of homeowners mortgaging for more than £500,00 is increasing. (Also see Latest Market Facts at the end of this article.)
Previously, prospective borrowers for these mega mortgages have experienced a mixed reception from the lenders – sometimes the lenders would provide the facility but viewed them as higher risk. For that reason lenders typically charged a premium rate of interest. But no longer. The tide has turned.
Mega mortgages have well and truly joined the mainstream and lenders are now competing hard for the business. Instead of facing a premium, borrowers are being offered around a quarter of a percent less than comparable deals for more normal sized mortgages. This is because lenders are increasingly basing their lending decisions on the borrowers ability to afford the mortgage with lesser emphasis being placed on the security provided by the property. It also helps that interest rates remain low.
If you’re a potential mega mortgage borrower, you’ll find that the banks will generally be the most welcoming. Compared to building societies and other mortgage lenders, banks tend to set higher lending limits. Some smaller lenders still set a cap at £500,000 whilst others restrict the amount they’ll lend against an individual property. But perhaps the best way of finding a really competitive mega mortgage is to go through a specialist mortgage broker. In the current market, any broker worth their salt will be able to source a great deal on six and seven figure mortgages.
For example, the Halifax will lend up to 90% on a 4.49% fixed rate for a two years on mortgages up to £2 million. And the arrangement fee is just £499. If you’ve got a larger deposit, at least 25%, then there are several other deals around at 3.99% - again for a two year fix usually with a fee of just a quarter of a percent.
Latest House Market Facts
In March, the average achieved sales price was 94% of the asking price.
The average number of viewings to sales was 11.
During March house prices in England and Wales rose by 0.5% driven by buoyant London market. London prices grew by 1.1%.
This is the fourth month in succession of house price growth. It’s also the highest monthly rise since the summer 2004.
Over the last 12 months house prices rose by 0.1%.
The performance of the London market results from of a number of factors:
· A shortage of new housing coming onto the market
· London has underperformed in terms of house price growth over the last few years. This in turn has meant that incomes and house prices in the capital are more closely aligned than in other regions.
In other parts of England and Wales, levels of affordability remain stretched.
At a local level away from London, prices have picked up – mainly in cities in the South of England. Berkshire (0.7%) and East Sussex (0.6%) performed well.
Cities in the North saw slower price growth, with Newcastle, Liverpool, and Manchester all reporting growth of just 0.1%.
The under-performing counties were Derbyshire (-0.1%) and the Isle of Wight (-0.1%).
The areas reporting the highest rises in March were all across London: Central London & City (1.9%), East London (1.4%), North London (1.2%), West London (1.2%), South-West London (1.0%) and South-East London (0.8%).
In March the national average house price stood at £162,500.
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