The 95% LTV mortgage scheme, backed by the Government, is now in place. This means prospective homebuyers should find there is support in their attempts to buy a home.
Some of the companies have released statements about the scheme
A Santander spokeswoman said: “We’re pleased to be supporting the Government’s 95% mortgage guarantee scheme and look forward to sharing full details of the products available shortly.”
A spokesman for Virgin Money said: “We’re pleased to say that we will be an active participant in the Government’s mortgage guarantee scheme and we are due to announce our proposition next month. The products available will be Virgin Money only and full details will be announced at launch.”
Industry specialists have discussed options for prospective buyers
Eleanor Williams, a finance expert at Moneyfacts urged caution, saying; “Borrowers may wish to note that the average two-year fixed rate at 95% LTV (loan-to-value) is currently 4.47%, a full 1% above the corresponding rate this time last year, while the average five-year equivalent at 4.32% is 0.42% higher year-on-year. Due to this, some may elect to wait until more providers and products are available to them.”
Alex Winn, mortgage expert at online broker and lender, Habito, said; “At the moment, lenders won’t offer 95 per cent mortgages on new-build properties, flats, or to anyone on furlough. Their maximum loan size is £500,000 – which if you’re buying somewhere with higher house prices, like London, could be more challenging.”
Alex Winn also said; “The availability of these deals is very much dependent on a buyer’s circumstances, which is why many people are turning to mortgage brokers, who understand different lender’s criteria, for help in finding the best deal specifically for them.”
Mark Harris, chief executive of mortgage broker SPF Private Clients said; “It is positive news for first-time buyers. For those with little in the way of a deposit, funding a 95 per cent mortgage has been pretty much impossible in recent months. The odd building society here and there has offered them, with Saffron building society launching at 95 per cent in June – but it only lasted a matter of days. Other 95 per cent products were restricted to certain postcodes.”
Chris Sykes, a mortgage consultant at Private Finance, said; “Personally, if I was buying and only had a five per cent deposit, I’d probably wait six months. Two years ago, the best 95 per cent interest rates were around 2.8 to 3 per cent, whereas now it’s around 4 per cent. Also, your only option is a five-year fixed rate deal, which means you’re locking yourself into a long commitment at a much higher than normal interest rate. If you have access to greater funds to form a larger deposit than 5 per cent you are definitely going to benefit from the rate reduction of having a 90 per cent mortgage rather than a 95 per cent.”
Anyone looking to arrange informed and up to date guidance regarding a mortgage should speak with an experienced professional.