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New mortgage for first time buyers

By Helen Carson
Thursday, 21 August 2008

A local bank has joined forces with property developers to launch a new mortgage aimed at first time buyers, it was revealed last night.

Ulster Bank and local developers have produced a home loan, available next month, which will mean first time buyers won’t have to stump up a hefty deposit and will be protected from future price hikes of up to 15%.

A key feature of the new mortgage is that the 5% deposit on the property, contributed by the developer, is repayable by the buyer only in the event of the house price rising by 5% or more after five years.

The buyer will also be safeguarded up to an additional 10% against any fall in property value over that five year period.

Ulster Bank head of mortgages, Derek Wilson, said the innovative mortgage is designed to support those trying to get onto the property ladder: “This product has been specially designed to provide first time buyers with additional protection against house price volatility and to allow them to purchase without having to fund a deposit themselves — two of the main deterrents.”

He added: “A steady supply of first time buyers entering the housing market is vitally important. Therefore by supporting first time buyers, this product offers benefits to the market as a whole.”

Julie Megrath, head of Money Affairs at the Consumer Council said: “The Consumer Council has been calling on the banks and financial institutions to do everything they can to ease the very real burden that many consumers are facing here.

“We welcome the response from the Ulster Bank to the needs of first time buyers by launching this new mortgage initiative in conjunction with some property developers which will help them get on the property ladder. We look forward to meeting with the Ulster Bank to discuss this new scheme in detail.

“The Consumer Council would encourage all banks to provide further innovative solutions to give choice to consumers during a time when they are under high and increasing financial distress.”

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Any FTB who falls for this is a mug. "Safeguarded up to an additional 10%" - it'll fall much more than that! NI prices are at least 30% over-valued in relation to the long term average of the NI/UK price ratio. Don't forget, of course, that the UK prices are falling as well.

In any case should a FTB who can't afford 5% of the price be buying in the first place? If they can't save up for a deposit it doesn't inspire confidence in their future ability to meet the repayments. A 100% mortgage all but in name - will banks never learn.

Posted by Johnston | 21.08.08, 16:48 GMT

Sounds suspiciously like one of those 'loans' where you give the bank the increase in equity of your house proportional to the loan when you want to pay the loan off.

These where shown to be very non-consumer friendly and simply a way for the bank to take your house in many cases.

This is clearly an advert, none of the disadvantages are shown. Banks have only their own interests at heart and simply balance risk with profits. They do get it wrong sometimes and lose but most of the time they win.

Posted by Tony | 21.08.08, 16:00 GMT

All well and good for the new buyers.

What about the likes of me and others out there. I bought my house this time last year and witt the credit crunch i have been demoated in work so im not earning enought to cover the morgage there for im missing payments and prob will lose the house soon. Cant even sell the house as the price has droped by £20000. Know one wants to help.

Have spoken to the morage company and they said '' Because of the mist payments you will have to pay an extra £50 a month to try and make it up''

Where is the sence in that what i cant make the corect payment in the first place.

Posted by Seamy | 21.08.08, 15:01 GMT

These schemes simply delay the inevitable pain and transfer it to us all. Let house prices drop and the unsustainable businesses fail. Prices have more than 20% to fall - this is nothing less than a scheme designed to consign young people to a lifetime of unnecessary debt for the benefit of the greedy few and should be universally condemned.

Posted by shipbuilder | 21.08.08, 13:04 GMT