5% Mortgages: Everything You Need to Know

Posted by M&P Estates on 15th March 2021 -

In the Spring Budget, Rishi Sunak announced government plans to guarantee mortgages with five per cent deposits, encouraging buyers with smaller deposits to get their feet on the property ladder. In this guide, we will offer you simple and up-to-date information about these mortgages.

 

When will it begin?

The Chancellor has said that the scheme will begin sometime in April.

 

Who will benefit?

The 5% mortgages will be available to both first-time buyers and home-movers.

 

What’s the limit?

The scheme will cover home purchases up to £600k.

 

How long will they be available?

5% deposit mortgages will be available until December 2022.

 

What type of mortgage can I get?

You must apply for a capital repayment mortgage. Interest-only mortgages are not part of the scheme.

 

How do I qualify?

For a 5% deposit mortgage, you will still have to pass normal mortgage affordability criteria and credit checks.

All so simple, so far. The Government has also said that buyers will have the opportunity to fix their rate for ‘at least’ five years if they wish. Now, banks and building societies are not obliged to offer the mortgages, however, Sunak has confirmed that several have already committed to doing so.

The confirmed list so far is Lloyds, Santander, Barclays, HSBC with Virgin Money and others to follow shortly after. Others are waiting for more details from the Government, as in the scheme, the government has guaranteed that if the lender loses money that the government will shoulder some of the cost.

Mortgages of any type can be tricky and confusing, so remember, it is always best to speak to a Financial Advisor. For more information, and to speak to a mortgage expert, contact us today.