JLT develops insurance solution to help high LTV borrowers

Jardine Lloyd Thompson (JLT) has launched a scheme to provide increased mortgage lending availability to first-time buyers and others with small deposits who wish to buy new homes built by Bovis Homes Ltd.

Called The Perfect 10, the mortgage deal will reduce lender risk at higher loan-to-value (LTV) ratios allowing lenders to offer more competitive rates to homebuyers.

The first scheme has been set up with Barclays so it can offer to Bovis Homes customers a two-year fixed rate of 4.99 per cent at 90 per cent LTV.

As well as protecting the lender from risk, the package also includes unemployment insurance for the buyer. As long as they meet the scheme’s eligibility criteria, buyers receive three years unemployment protection from the date of exchange. If they lose their job mortgage payments will be met for up to twelve months. JLT hopes to replicate the scheme for other housebuilders in the UK.

Steven Rance, partner at JLT Lending Risk Solutions, said: “In the last quarter of 2006, Council of Mortgage Lenders' figures show there were almost 8,000 new house sales in the UK at 90 per cent loan-to-value. By the last quarter of 2009 this figure had dropped to only 117 sales - a staggering fall of 98.5 per cent.

“Until now, buyers looking to purchase a new home with a 10 per cent deposit have had few options other than shared equity schemes. Now, thanks to this unique and innovative product from JLT, purchasers can access a highly competitive mortgage product, with a much smaller deposit, and purchase their new Bovis Home outright. This is an extremely timely and exciting development for lenders, builders and the UK housing sector."

David Ritchie, chief executive of Bovis Homes, commented: “Many of our potential customers are struggling to save the higher deposits

required by the mortgage market today and this innovative new product, which is currently only available to us, will mean that more customers will be able to buy a new Bovis Home now, at an affordable cost.

“We are also convinced that The Perfect 10 will allow us to reduce use of

capital-hungry shared equity-style products, such as our own Jumpstart

scheme, thus releasing more cash into the business for further investment.

We believe this innovative new product will also assist the group in delivering

its sales targets for 2010 and beyond.”