An interesting and unique new mortgage from Mortgage Express, the specialist lending arm of Bradford & Bingley, is aimed at first time buyers.

The new loan allows homebuyers to borrow up to 130% of the value of their property with no extra charges for a mortgage indemnity guarantee (MIG), now known as a higher lending charge.

First time buyers paying rent, often in excess of the cost of buying with a mortgage, frequently have difficulty saving the deposit on a new home. The Mortgage Express Max 130 solves this problem. But it is not cheap.

There are two rates currently available with Max 130 - a three-year fix at 6.49% and a two-year discount of 0.31% (current pay rate of 6.24%). The income multiples are 3.75 for single applications and 2.75 for joint applications. The amount that customers can borrow is based on their income and ability to repay.

The amount of the loan over the property value can be used for any legal purpose, such as home improvements, capital raising and debt consolidation. The way to view the Max 130 deal is to plan to switch to a lower rate as soon as possible after you have built up some equity in the property. You can remortgage as soon as the two or three year fixed or discount offers expire. There are no penalties for remortgaging after these initial periods.

Before its launch, Max 130 was piloted in Northern Ireland for nearly two years, with positive results. It will now be available through mortgage brokers and intermediaries in England, Wales and Scotland.

'This product is excellent because it is a prudent way of meeting the genuine needs of customers,’ said broker Sean Sloan, partner in The Mortgage Shop in Northern Ireland. ‘I have found it to be extremely useful for a range of customers who are short on equity, but where affordability is not a problem.’
#Launching the new mortgage, Roger Hillier of Mortgage Express, said: ‘As a responsible lender, it was crucial that we pilot Max 130. The two years it was available in Northern Ireland helped us better understand this market, gauge demand and listen to broker feedback.’

‘We are therefore confident about the need for a product such as this, designed specifically for first time buyers struggling to get onto the housing ladder, in addition to those looking to consolidate credit cards, personal loans, and second charges into one competitive loan. This will make repayments more manageable and could be a much better alternative for these customers in the long term,’ Hillier added.