One of the UK’s biggest mortgage lenders, Nationwide, has announced it will be offering 95% deals for borrowers with 5% deposits.
The building society is the largest mortgage lender to offer these low deposit deals outside of the government’s Mortgage Guarantee Scheme which launched recently to help boost homeownership.
HSBC, Lloyds, Barclays, Santander and NatWest have all been offering deals for 95% loan-to-value (LTV) under the government initiative to turn ‘generation rent’ into ‘generation buy’ since its launch. Last week Virgin Money announced it was now joining the scheme with mortgages for borrowers with 5% to put down as a deposit.
Now, this week, Nationwide revealed it would be adding its name to the growing list of lenders which have chosen to release 95% LTV deals independently of the scheme.
Nationwide’s offering has been described by Greg Cunnington, director of lender relationships and new homes at Alexander Hall, as ‘competitive’. Indeed, rates start at 3.49% with all products priced below 4% for first-time buyers and home movers.
The lowest rate available via the Mortgage Guarantee Scheme is 3.90% from NatWest for a two-year fixed deal.
With Nationwide’s offering first-time buyers will get £500 cashback when they complete. Plus the range will only be available to employed borrowers and the property in question must also be a house.
New builds, however, are excluded. Buyers who are keen to purchase a home in the new build market can still take advantage of the government’s Help to Buy scheme, which enables first-time buyers to purchase a property with a 5% deposit whilst taking out a loan for a further 20% (40% in London).
Greg Cunnington, said: “It’s really positive to see one of the largest mortgage lenders in the country in Nationwide return with mortgage products to help buyers with a 5% deposit.
“The rates being offered are market leading, adding some real competition to the lenders already in this space which is great news for buyers. These are available to both first-time buyers and home movers.”
Watch out for ….
Cunnington added a note of caution on Nationwide’s offering. He explained: “It must be noted that as they look to gently return to the market place here there are some notable restrictions on the criteria, such as not being available on flats or to self-employed individuals.
“This highlights the importance of speaking to a mortgage intermediary with access to lenders across the market to ensure you receive advice on all of the options available to you.
“This follows on from the return here last week of Virgin Money, who are offering mortgages to buyers with a 5% deposit via the government’s Mortgage Guarantee Scheme, meaning most major lenders are now supporting buyers with a 5% deposit once more.
Virgin Money’s new deals include a five-year fixed rate mortgage with no fee and a rate of 3.99%. However for the higher fees of 4.19% and 4.39% borrowers can lock into 10-year and 15-year fixed rates respectively. Both of these longer-term fixes are fee free.
It was also announced yesterday Hinckley & Rugby Building Society would be offering 95% deals – adding even more options to buyers with a 5% deposit.
Product details (source: Nationwide Building Society)
| Nationwide’s new 95% LTV range for first-time buyers and new customers moving home | ||
| Product | Fee | Rate |
| Two-year fixed rate | £1,499 | 3.49% |
| £999 | 3.69% | |
| No fee | 3.84% | |
| Five-year fixed rate | £1,499 | 3.79% |
| £999 | 3.89% | |
| No fee | 3.99% | |
| Two-year tracker rate | £1,499 | 3.59% |
| £999 | 3.79% | |
| No fee | 3.94% | |
Henry Jordan, director of mortgages at Nationwide Building Society, said: “Deposits and affordability are two of the major issues currently facing first-time buyers, making it harder than ever for them to get their first home.
“We believe that with the launch of our new market-leading 95% range, along with the recent introduction of Helping Hand, we are playing a leading role in helping to tackle both these issues and giving people even more choice as they look to move into a home of their own.
“As the UK’s biggest building society and second largest lender, supporting people into their first home is at the heart of what we do.
“As one of the leading lenders to first-time buyers, we feel confident returning to the 95% LTV market without the need for the Mortgage Guarantee Scheme. By not being part of the scheme, we can provide improved value to our members and this is demonstrated by the market-leading rates we’re announcing today.”
This is excellent news but our situation is tricky.
We own a BTL property.
Some years ago we let it to a Mr. McD. so the ASTA was in his name.
Our daughter became his partner, and they shared the property.
In 2017 he died: this left our daughter left to [ay the rent on the property.
Her ex-husband moved in to help pay the rent (they are divorced but still share the same surname).
So … technically we’re not supposed to let to our daughter.
Ideally we’re looking to help her buy this property using the Government backed / “95% mortgage” schemes but we’re finding the process very difficult.