Adverse Mortgages UK

Young professionals in a hurry to purchase a first house can find that 100 per cent plus mortgages are a useful product, according to an independent financial adviser.

A number of lenders are currently prepared to offer 125 per cent loan to value mortgages, despite several recent property market surveys suggesting prices are beginning to fall in some areas.

Peter O'Donovan, mortgage manager for Bestinvest, does not believe that a slight drop in house prices will trouble those taking out such products, but admitted they may have to stay in the property longer than they first anticipated.

For some people the benefits of a 100 per cent plus mortgage are greater than the possible pitfalls, he explained, as they are able to buy the house, pay the stamp duty and repay outstanding debts with the loan.

Young adults who have accumulated a sizeable amount of student debt may find such products particularly useful if they are entering a profession which is likely to see their earnings rise quickly in the next few years, continued Mr O'Donovan.

"These people will soon be able to meet the [repayments] through their normal salaries. As [their salaries] increase then the strain on their monthly disposable income gets less and less," he added.

Julia Harris of personal finance website Moneyfacts.co.uk recently said such mortgages can be a "perfect solution" for some borrowers, but advised people thinking of taking one out to consider how much extra it will cost them in interest payments.

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