The new Welcome Mortgages, available up to 90% loan-to-value (LTV), provide a welcome innovation in the mortgage market by offering customers the option of paying 0% on the first 3 or 6 months of their mortgage, with the remaining monthly payments at a fixed rate for up to 3 or 5 years.
Furthermore, the total cost of these Welcome products is comparable with the standard fixed rate mortgages offered by the Society. There is no completion fee, a free standard valuation is available up to £335 and 10% capital repayments are allowed each year without penalty.
Kim Rebecchi, Leeds Building Society's Sales and Marketing Director comments:
"The cost of buying a home is not limited to finding a deposit and being able to pay the mortgage. Stamp duty, solicitor's fees and searches all have to be budgeted for.
"We also know that when people buy a new home, they want to make changes and put their own personal mark on it, and that is why we have launched the unique Welcome Mortgage. Customers can choose a 0% interest rate period and pay capital only, for either 3 or 6 months.
"This reduces their outgoings immediately after they move in and gives borrowers the opportunity to decorate, make improvements or buy furniture for their new home. They then pay a fixed monthly payment for the remainder of the product period at a competitive and affordable rate, creating flexibility and certainty at the same time."
The 3-year fixed rate version starts from only 3.79%, with 3 months at 0%, and the 5-year fixed rate at only 4.23%. Both these products are at broadly the same cost to the borrower when compared to the standard 3 and 5-year fixed rate version at 3.45% and 3.99% respectively.
Kim added:
"These products offer excellent value and support borrowers in the early months in their new home. Depending on the size of the mortgage and the 0% period chosen, borrowers can initially reduce their outgoings by thousands of pounds, allowing them the flexibility to improve their property and manage their cash flow. Furthermore, their monthly payment after the 0% period does not increase significantly compared to a standard fixed rate product, avoiding a payment shock.
"These products 'Welcome' borrowers to their new home and really are excellent options for purchasers."
Martyn Smith, head of mortgage products, Legal & General Network, comments on the new Welcome mortgage, announced today by Leeds Building Society:
"We have just closed our Legal & General Mortgage Club 95% LTV exclusive with Leeds Building Society which was hugely successful with the tranche quickly being filled - so it's good to see further innovation from them. As lender appetite and market confidence grows, we would expect more lenders to look towards innovation to meet these demands.
"There are still a large number of borrowers who haven't qualified for some of the great recent rates at lower LTV, so it's encouraging to see new products in the market - particularly above 75% LTV."
