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
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before