With the Help to Buy mortgage guarantee scheme set to end in December, NatWest has launched a new mortgage with a 5% deposit to help first-time buyers.
The lender is the first high street bank to say it will continue to offer a 95% loan-to-value mortgage since the government announced it would be ending the scheme.
The bank’s new 95% mortgage will be open to everyone eligible under the government scheme as well as those looking to buy a second home. The maximum home value remains at £600,000.
The rates available are the same as under the government scheme, ranging from 3.69% for a two-year fix to 4.59% for a five-year fixed rate.
Lloyd Cochrane, NatWest head of mortgages, said: “Buying your first home is a huge moment for our customers and we are committed to doing everything we can to help people realise that ambition. That’s why today we are promising to continue to lend to those with smaller deposits.”
Chancellor Phillip Hammond said in a letter to Bank of England governor Mark Carney in September that the scheme would not go beyond the end of 2016 as planned.
Hammond said that as over 30 lenders were now offering 5% mortgages to homebuyers the specific purpose of the scheme had now been “successfully achieved”.
The Help to Buy mortgage guarantee scheme was launched in 2013 to help first-time buyers get on the housing ladder by encouraging lenders to offer 5% loans to borrowers through government support.
It provides a government guarantee to lenders on mortgages where a borrower has a deposit of between 5% and 20% for existing properties as well as a new-build.
Under the scheme, the government acts as a guarantor on mortgage loans for 15% of the value of the property. The idea of this is that it will give banks and building societies peace of mind and therefore encourage them to offer larger loan-to-value products of between 80% and 95%.
The Help to Buy equity loan and the Help to Buy ISA will continue to be offered.
With the Help to Buy equity loan scheme you can borrow up to 20% of the purchase price of a new-build home. The loan comes from the government and is repaid when the property is sold. The rest of the payment is made up with a deposit of at least 5% and a mortgage of up to 75%.
Help to Buy ISAs give first-time buyers saving for a deposit the opportunity to put away £200 a month in a dedicated ISA that the government will top up by 25%, up to a maximum of £3,000.
Deposits are typically in the region of 10% of the value of a property and can run into tens of thousands of pounds. For many aspiring home owners they are the biggest barrier to getting onto the property ladder.
I am 69 and still working part-time. Owing to skullduggery on the part of my ex-husband, I am now homeless.
I am staying with a friend but he wants his home back. I have some hoarded savings. I have worked all my life and wonder if the government is only fixated on younger people. I have contributed so .. what about people like me?
Dont’t worry Rosanne.. The government hasn’t helped young people either. The help to buy scheme was a con in a way. This has pushed the house prices high so the young people couldn’t buy anything during this time anyway.