If you are a first-time buyer with a 5% deposit you could be benefiting from some of the most competitive mortgage deals on the market.
That’s according to the latest data from Moneyfacts.co.uk which has revealed interest rates for people who need to borrow 95% of the value of their property have fallen over the past year.
What’s more the number of fixed-rate mortgages available for people who have a 5% deposit or equity have soared to over 400.
Eleanor Williams, a finance expert at Moneyfacts, said the rates available now were much lower than they were two or even five years ago when the average 95% loan had an interest rate of more than 5%.
Fast forward to today and rates are averaging at 3.22% for a two-year fixed rate mortgage.
Remortgaging
The low rates and strong competition will not only be good news for first-time buyers with small deposits but also for homeowners with only a little equity in their property who need to remortgage.
Williams added: “As with any financial commitment, it is vital that borrowers take into account the overall true cost of any deal and make sure that what they are committing to will be affordable over the long-term.
“Particularly with higher LTV products, talking with an independent financial adviser about the option to make overpayments in line with the lender’s boundaries may be a sensible precaution, and ensure they have an even wider pool of products available to them in the future.”
Last week a mortgage broker predicted mortgage rates for all borrowers would fall this year thanks to the competition from lenders but also because of a ‘strong chance’ of interest rate cuts from the Bank of England.
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