Posted on: Monday, October 5, 2015
95% Normal
The launch of the government’s Help To Buy Guarantee scheme in late 2013 gave much-needed help to buyers with small deposits.
The scheme gives an insurance policy to lenders (paid for by the government), to protect them against potential losses in the event of repossessing a high loan-to-value mortgage: with relatively little equity at the outset, the lender risks a much greater loss if things go wrong, and after the credit crunch they were naturally wary.
So before the launch of the Help to Buy scheme, borrowers with only a 5% deposit had very few options indeed. By bringing the guarantee into play, much bigger names were happy to join in with Halifax being both the biggest and the first out of the blocks but most of the high street soon joining in.
Nationwide has been a notable absentee in this, only offering 95% products to existing borrowers moving home. Until now.
In early September Nationwide finally launched a range of 95% products. They’ve always had a very strong reputation for movers and first time buyers, and the new deals are well placed compared to the other big names so this – coming with a £1bn lending commitment – is very welcome news.
And interestingly they’re doing it outside the government’s Help to Buy scheme. That’s due to finish at the end of 2016 anyway, but it’s encouraging that Nationwide feels confident enough to take 5% deposits with no extra security. They’re not the first to do this (Yorkshire BS and TSB, for example, both operate outside the guarantee) but are certainly the biggest.
At the same time, Santander have announced they’re taking their 95% mortgage products out of the guarantee, though this will be phased over time.
But with the end of the scheme still over a year away, it’s a very good sign that lenders are feeling confident enough to return 95% mortgages to a more normal footing.
Guild Mortgage Service, Provided by London & Country Mortgages
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £60 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.