{"id":762,"date":"2021-04-19T16:20:45","date_gmt":"2021-04-19T15:20:45","guid":{"rendered":"https:\/\/www.kinnison.finance\/?p=762"},"modified":"2021-04-19T16:27:35","modified_gmt":"2021-04-19T15:27:35","slug":"95-loan-to-value-mortgages-are-back","status":"publish","type":"post","link":"https:\/\/www.kinnison.finance\/95-loan-to-value-mortgages-are-back\/","title":{"rendered":"95% Loan-to-Value Mortgages are Back"},"content":{"rendered":"\n
The announcement by the Chancellor, in the March budget, of a mortgage guarantee scheme was the catalyst lenders needed to start focusing again on the low deposit lending market. Some of the biggest banks in the UK have signed up to the scheme and will from April offer 95% loan-to-value (LTV) mortgages. A number of lenders have already launched low deposit mortgages without the support of the government\u2019s scheme and there is an expectation that more lenders will follow. Increased competition should provide borrowers with more choice, greater flexibility and hopefully (eventually) more competitive interest rates.<\/p>\n\n\n\n\n\n\n\n
The mortgage guarantee scheme which is due to run from April 2021 to 31 December 2022 will see the government \u2018guaranteeing\u2019 95% mortgages for buyers with 5% deposits. Under the terms of the scheme, the government will guarantee the portion of the mortgage over 80% (so, with a 95% mortgage, the remaining 15%).<\/p>\n\n\n\n
Lenders who offer regulated mortgages to home owners are eligible to participate in the scheme. Under the terms of the scheme, participating lenders will need to offer a five-year fixed-rate mortgage as part of their mortgage range. There is an anticipation that some of the high street banks will participate in the scheme.<\/p>\n\n\n\n
The mortgage guarantee scheme is open to all home buyers, whether you\u2019re a first-time buyer, 2nd<\/sup> stepper or downsizer. You\u2019ll need to be buying a property to live in yourself \u2013 second homes and buy-to-let properties are not permitted. Both new-build and existing properties priced up to \u00a3600,000 are eligible. You\u2019ll need to apply for a repayment (not interest-only) mortgage and pass standard lender affordability checks, including a loan-to-income (\u201cLTI\u201d) test and credit score assessment.<\/p>\n\n\n\n Under the government scheme, lenders are required to offer 95% mortgages within set criteria. Where lenders prefer to set their own parameters, they must do so outside the scheme. A number of lenders (outside the scheme) have already launched their offering with their own criteria such as:<\/p>\n\n\n\n It\u2019s important that you fully understand the potential risks of a high LTV mortgage:<\/p>\n\n\n\n Detailed below are the 5-year fixed rate mortgage options for a home purchase of value \u00a3500,000 at 95% and 90% LTVs from the same lender:<\/p>\n\n\n\nWhy are some lenders choosing to offer 95% LTV mortgages outside the government back scheme?<\/strong><\/h2>\n\n\n\n
What are the risks of 95% LTV mortgages?<\/strong><\/h2>\n\n\n\n
Example<\/h2>\n\n\n\n