Remortgage warning sent out to 100% borrowers

Homeowners with 100 per cent mortgages should overpay as much as possible if they are to stand a chance of being able to remortgage.

The recent flurry of lenders scrapping products offering 100 or 125 per cent mortgages to borrowers has meant loans for people who want to borrow more than the value of their home are becoming scarce.

However, the advice for anyone in possession of such a mortgage is to start hiking their monthly repayments said mortgage broker John Charcol this week.

Katie Tucker, technical manager at the brokers, said: "Coventry Godiva has withdrawn its 125 per cent MOREgage, along with Abbey and Alliance & Leicester this week, leaving only BM Solutions, Northern Rock, Mortgage Express and Scottish Widows lending over 100 per cent.

"Anyone with existing mortgages in excess of 100 per cent should overpay as much as possible now to reduce their loan-to-value to less than 100 per cent, as their chances of having a remortgage option when the time comes is slim."

However Coventry reassured current borrowers of its MOREgage product, which combines a mortgage and unsecured loan, they will be able to take advantage of several options when their scheme ends.

Colin Franklin, Coventry's head of sales, said customers could take advantage of a competitive fee-free fixed rate.

He added: "In addition, the Coventry's new business schemes have always been available to all new and existing borrowers and as most MOREgage customers borrow substantially less than the maximum, many will be eligible for a traditional new business product."