A new government scheme to help first-time buyers get on the housing ladder has been launched, with high street banks now offering mortgages with just 5% deposit.
The scheme guarantees part of the mortgage, typically 15%, should the borrower not be able to make their monthly repayments; reducing the risk to the lender fairly significantly, to the level of a typical home buyer with an 85% loan-to-value mortgage.
It’s good news for those looking to buy with a low deposit and are unable to build up a deposit further, but could this fuel demand further when house prices are already rising to record levels? And in fact make houses even more unaffordable for others looking to buy.
A quick look at just some of mortgages released on this scheme are:
Halifax: 2 year fixed rate - 4%
Natwest: 5 year fixed rate - 4.04%
Santander: 5 year fixed rate - 4.09%
It’s worth noting that interest rates will be lower with a 10% deposit, and if you’re looking to buy, it’s best to use an independent mortgage broker to find the best deal for you.