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Return of the 100% mortgage

Aldermore bank has launched a mortgage offering home buyers the opportunity to borrow 100 percent of the cost of their home.

The Family Guarantee Mortgage, available to first-timers and those moving house, will be the first of its type since the credit crunch hit.

However, as its name suggests, the proviso that accompanies its interest rate of 6.48 percent is that any borrowing over 75 percent of the value of the property must be guaranteed by a relative.

Aldermore managing director Charles Haresnape believes that the deal is a step towards getting 'disenfranchised' first-time buyers on the first rung of the property ladder. 'We believe this is the single biggest issue facing first-time buyers and it needs to be addressed head on if the UK's housing market is to have a chance of recovery.

'Family support in the form of gifted deposits has become commonplace and is widely accepted by most lenders. The Family Guarantee Mortgage gives much greater flexibility, enabling guarantors to retain savings and instead provide a guarantee, requiring no cash deposit.'

The maximum you can borrow is £250,000, and the minimum age of borrowers is 25. Add to that a booking fee of £299 and a completion fee of £999 and you're all set, with the rate fixed for three years.

David Hollingworth, of London & Country mortgages, added: 'Deposit has been the big issue for borrowers, although we are seeing a slow move towards higher LTV mortgages.

'This is not suddenly going to open up a massive first-time buyer mortgage because some buyers will be sitting tight, but for someone who has seen a place they want and has decided it is the right time for them to buy, this could prove a solution.'

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