The mortgage market saw more good news today when Chancellor Rishi Sunak confirmed plans to launch another government-backed 95 per cent Help to Buy mortgage guarantee scheme.
Great news is that the scheme will be open to home buyers with a five per cent deposit and not just to first-time buyers. However, it is only available for properties worth up to £600,000. The scheme is very similar to the previous Help to Buy scheme launched in 2013 to help lenders transition back into the market, and is open to second hand properties not just new-build.
Sunak confirmed the UK’s biggest banks are poised to lend on the scheme from mid-April, include Lloyds, NatWest, Santander, Barclays and HSBC with Virgin Money readying to launch in May.
All mortgages will need to be repayment, not interest-only on a loan to value of between 91 to 95 per cent and are subject to the usual affordability rules. All participating lenders will also be required to offer a five-year fixed rate product as part of its guaranteed range of mortgages.
Chris Croake, Director of Choice Mortgage Solutions, commented: “The 95 per cent Help to Buy mortgage guarantee scheme will make a real difference in enabling more first-time buyers and home movers, with a minimum of 5 per cent deposit, to get the keys to their new home, and we’re excited to play our part in it. We hope to hear from lenders shortly, it’s good to see some great lenders on board and rolling out products next month”.
The scheme will be open for new mortgage applications from April 2021 to December 2022, reflecting the government view that the scarcity of high loan-to-value lending is primarily a response to the pandemic rather than a more structural problem.
The government will review the continuing need for the scheme towards the planned end date and has capped the bill for the scheme at £3.9bn.
To discuss the new scheme or if any have any questions please contact us on 0800 612 8099 or contact us here.