Borrowers count the cost of mortgage indemnity

Autumn Property Survey

IN SPITE of the slump in property prices over the past five years, it is possible to get a 100 per cent loan to buy a home if you know where to look. Loans amounting to 90 per cent or 95 per cent of the valuation are widely available.

But most lenders require borrowers wanting 75 per cent or upwards of valuation to take out mortgage indemnity policies to protect the lenders against loss if buyers default and the property has to be repossessed. And mortgage indemnity guarantees can add substantially to the cost of mortgages, especially for first-time buyers, who are most likely to need 75 per cent or more of the valuation.

Policies only cover the excess value, and are invariably paid for by the borrower for the benefit of the insurer. Premiums range from 2 per cent to as much as 8 per cent on the amount covered.

A detailed study in the August issue of Your Mortgage magazine shows that seven lenders require MIGs for anyone wanting to borrow 75 per cent of the property valuation. Birmingham Midshires charges pounds 120 a year to cover a pounds 60,000 loan on a property valued at pounds 80,000, National Counties charges pounds 160, Coventry pounds 164, the Norwich & Peterborough pounds 176, the Lambeth pounds 200, the Homesdale pounds 350 and the Century Building Society pounds 530.

Fifteen lenders, including Barclays and Midland banks, the Royal Bank of Scotland and National Provincial Building Society, will lend 80 per cent of property values without a MIG. More than 50 others require MIGs on loans of 80 per cent, but premiums on a pounds 64,000 loan on the same house worth pounds 80,000 will range from pounds 119 at the Nationwide Building Society, pounds 120 at Alliance & Leicester, pounds 160 at Abbey National and Natwest Home Loans, and pounds 166 at the Halifax & Leeds, to pounds 184 at TSB, pounds 280 at the Skipton, and pounds 562 at the Century.

Just three lenders, Cheltenham & Gloucester, National and Provincial, and Royal Bank of Scotland, will lend 85 per cent of valuation without a MIG. The charges at other lenders range from pounds 180 at Cambridge Building Society, pounds 236 at Midland Bank, pounds 248 at Barclays, pounds 412 at the Halifax & Leeds, and pounds 480 at Abbey National, right up to the Lambeth, which takes over the top spot with an annual premium of pounds 720.

When loans reach 90 per cent of valuation, Cheltenham & Gloucester is the only lender not to require a MIG. Charges elsewhere for a pounds 72,000 loan on that same pounds 80,000 property range from pounds 400 at Yorkshire Bank and pounds 472 at Midland, up to more than pounds 1,000 a year at four small, risk-averse building societies - Birmingham Midshires, Norwich & Peterborough, Homesdale and the Lambeth.

On 95 per loans C&G remains the sole exception, and premiums required by almost 70 other lenders rise from pounds 600 at Yorkshire Bank to a huge pounds 1,600 a year at Birmingham Midshires, Lambeth, and Norwich & Peterborough. Just 11 lenders will give 100 per cent mortgages. Of these, Century Building Society is the cheapest, charging a premium of just pounds 850 on an pounds 80,000 loan. Midland Bank charges pounds 1,500, followed by Chelsea, Teachers and Abbey National, Natwest Home Loans, TSB, Nationwide, and Dunfermline, while the Royal Bank of Scotland and Yorkshire Building Society each charge pounds 2,400 a year.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Beverley James: Accounts Payable

£22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower