Aldermore unveils Help to Buy mortgages

Aldermore has become the fifth lender to offer Help to Buy mortgages aimed at borrowers with a deposit of 10% or less.

The bank will offer two fixed-rate mortgages for loans of between 85% and 95% of a property’s value – both of which will last for two years, and both of which are open to those looking to remortgage their existing homes, as well as movers on the housing ladder and first-time buyers trying to get on the first rung.

The rates on the two deals, both of which come with a £999 fee, will be fixed at 4.98% for those needing to borrow 90% and 5.28% for those with just 5% to put down.

Charles Haresnape, managing director of residential mortgages at Aldermore, said: “We are committed to lending to homeowners in the UK, especially those with small deposits, and those who are unable to access mortgages from traditional high street lenders, despite being creditworthy.”

As part of this commitment, the bank is also cutting the deposit requirement on certain mortgages that fall outside the Help to Buy scheme from 20% to just 15%.

Remortgage race

Aldermore’s hopes of being the first bank to offer Help to Buy deals to remortgage customers were dashed when Virgin Money announced details of its Help to Buy range for both buyers and remortgagers ahead of schedule last week.

The announcements from these banks come after Chancellor George Osborne mentioned their offering Help to Buy mortgage deals in his Autumn Statement: “Help to Buy is now helping thousands to own their own home. I can announce today that Aldermore and Virgin, two challenger banks, expect to join the scheme this month.”

They join Halifax, HSBC, RBS/NatWest, all of which have been offering Help to Buy mortgages for some months.

How do Aldermore’s Help to Buy rates stack up?

Aldermore has positioned its two-year fix for borrowers with a 5% deposit to come just ahead of Virgin Money’s deal. The Aldermore mortgage has a rate of 5.28%, while Virgin’s 95% loan-to-value (LTV) deal comes with a rate of 5.29%. However, the Virgin deal will still work out cheaper for most as it is fee-free, meaning borrowers save £999 upfront compared to the Aldermore offer.

Both deals also look expensive compared to HSBC’s two-year, 95% deal with a rate of 4.79% and a £99 booking fee, or RBS/NatWest’s fee-free, two-year deal at 4.99%. There are also a number of mainstream mortgages currently on offer outside the Help to Buy framework.

The new 90% LTV Help to Buy mortgage from Aldermore, with a two-year fixed rate of 4.98% and a £999 fee, is also easily beaten by Virgin’s fee-free, two-year fix – especially as this offer comes with £300 cashback to help buyers with legal fees, valuation fees or the cost of moving in general.

For those who can raise a 15% deposit, however, Aldermore’s decision to change all its 80% LTV mortgages to 85% LTV, thereby opening them up to another section of buyers and remortgagers, may prove more interesting.

The first mortgage to be offered under these terms is a new 85%, two-year fix at 4.78%, again with a £999 fee.
Haresnape added: “The housing market is improving steadily, but for many a 20% deposit is a stretch too far. I’m delighted that we can step in and help out.”

How does the Help to Buy scheme work?

Help to Buy is a government scheme that aims to help people get on and move up the property ladder by making more mortgages available to those with deposits of as little as 5%. The first phase of the scheme was launched in April, and only provided help to first-time buyers buying new-build homes.

But the extended scheme, launched in October, is open to all buyers and for all types of property, and is designed to encourage lenders to offer 95% mortgages. To qualify, you simply need to be buying a property that is not worth more than £600,000 and to have a deposit of at least 5%.

The government will then guarantee up to a further 15% of the property's value, in return for a fee from the lender offering the mortgage deal.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct

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