Banking Group Launches New Mortgage Scheme For First-time Buyers – Mortgage Advice
First-time buyers are finding themselves in a difficult situation with falling house prices as the housing market becomes more affordable. Expert opinion is they are being squeezed out of home ownership by the very large place they are required to have in order to obtain their first mortgage. Saving up to £25,000 for a place takes a lot of effort and you need to have the commitment to save that much money each month for a place. Lloyds Banking Group was recently rescued by taxpayer’s money when the government stepped in after they acquired the ill-fated HBOS (Halifax and the Bank of Scotland). Today they have released an inventive mortgage product aimed at first-time buyers looking to get on the character market.
Now is a good time for first-time buyers to buy their first home. It is a ‘buyers market’ and buyers can negotiate some great deals with sellers that are eager to sell. character prices now stand at 2004 prices which make them excellent value and the fall in house prices is possibly nearing the bottom. The best time to buy a home is when the market is nearing the bottom of a falling market before house price stabilise and then start to rise which they will do one day in the near future.
This new product from is a good deal for adults who are fortunate to have parents that are able help them buy a new home. This is a niche mortgage product and unfortunately is not appropriate for buyers where their parents are unable to help them financially. This will limit the number of people this mortgage will be obtainable to help. The mortgage market remains an unfair battle ground as lenders battle to find more ingenuous ways to lend money without risk to their balance sheets.
They are offering a very attractive mortgage deal for first-time buyers and an exceptionally low mortgage rate for a 95% mortgage; you would expect these interest rates for a 75% mortgage scheme.
Here is their lending criteria to obtain a first-time buyers 95% mortgage:
1. Mortgage for 95% of the character value
2. A 5% place required
3. Parents or guarantors will need to place 20% of the buy price of the home into a Lloyds Savings explain the next 3 ½ years. They have not announced the interest rate for their saving account however. There will be a legal charge over the money deposited a savings account and the place is locked away for 3 ½ years.
4. Income required is between 2 ½ times income to 5 times income. It is dependent on the kind of job, time in employment, other financial commitments, whether or not you are a customer already, etc.
5. A £99 activation fee and a valuation fee based on the house price is required to start the application course of action.
6. This mortgage is portable which method that you can move from one home to another without any penalty.
7. There is no ‘Higher Lending Fees’ which is typically additional to a mortgage over 75% loan-to-value.
8. There is a Penalty fee of 3% of the noticeable mortgage for the first two years and then a 2% fees for the third year if you were to sell the house and repay the mortgage early.
9. This product allows up to 10% overpayments each year and after the first twelve months you are allowed to under pay the mortgage if required by any overpayments before made.
10. The interest rate is fixed from 4.39% to 4.89% for the next three years depending on the product fee you pay.
o 4.39% has a product fee of £995 which can be additional to the mortgage.
o 4.49% has a product fee of £495 which can be additional to the mortgage
o 4.89% has no product fee
This scheme works like this:
The house is valued at £100,000; the first-time buyer finds a 5% place of £5,000 plus valuation fees, solicitors’ fees, search fees and other disbursement fees. The parents or guarantors agree to place 20% or £20,000 into Bank Savings explain the next 3 1/2 years minimum. After the three and a half years if the value of the mortgage has dropped to below 90% of the value of the home purchased then the parents or guarantors are free to move their money.
Their commitment to the legal charge placed over their savings money ends to the mortgage lender. The parents will keep tied into the mortgage until the value of the mortgage has dropped to below 90%. So parents could be tied in for a long time if house prices continue falling and the housing market does not retrieve soon.
If you take a repayment mortgage over 25 years for £95,000, after three years you would have paid back around 6% of the capital borrowed. So after three years your mortgage balance would be £89,300 and your parents would then be released from their legal commitment to the mortgage.
This is a great opportunity for first-time buyers to take advantage of in the current climate. First-time buyers are basic to the housing market returning to normality. Other products offered in the past required the parents, guarantors and grandparents to provide a legal charge over their own home and this placed them at total risk of losing their home in addition.
Always take ask to speak to a Mortgage Adviser before committing to a new mortgage and ask as many questions as you need to in order to fully understand your new mortgage product. Mortgage Brokers who use the ‘whole of the mortgage market’ are the best. They will be able to provide you with the best mortgage for your circumstance from the whole of the mortgage market. Furthermore, they will be able to provide you with complete ‘Advice and Recommendation for your new mortgage.