New leading 95% mortgages!

Help to Buy, the scheme that helps borrowers with small deposits buy a home or move up the housing ladder, has so far seen three lenders – NatWest/RBS, Halifax and HSBC– unveil mortgage deals which meet its terms.

In addition to these offers, other participating lenders have pledged to launch their deals in the New Year.

In the meantime, the main 95% mortgage market has seen a surge of new or improved best-buy deals which don’t fall under the scheme. So, if you are looking to buy a home with 5% of its value as a deposit, read on to find out how to grab the best mortgage deal – with or without Help to Buy

Yorkshire BS returns to 95% 

On Wednesday November 20, Yorkshire Building Society launched a raft of 95% mortgages. It’s the first time the lender has offered loans of this size since 2008 – a time when many banks and building societies withdrew such deals, having been stung by the credit crunch. 

None of Yorkshire’s new deals form part of Help to Buy and none require the intervention of family savings. The only restriction is that they are only currently available for house purchase – though this doesn’t mean you have to be a first-time buyer. And they will be available for remortgagers in early 2014. We take a look a closer look at the deals and what they could mean for the future of the mortgage market. 

Market leading deals 

The first option from Yorkshire is a two-year fixed rate priced at 4.69%, which comes with a £845 fee. Alternatively, you could opt for a higher rate of 4.89% over the same timeframe, pay no fee – and get £500 cashback thrown in. 

If you want to shelter from interest rate rises for longer, the lender is offering a five-year fix at a rate of 5.09% in return for a £845 fee. Otherwise, there’s a higher 5.29% rate available over this timeframe for no fee – also with £500 cashback. 

There are lower rates available through Yorkshire’s Chelsea building society brand (4.59% and 4.99% for the two and five years respectively) which will theoretically sit at the top of the 95% mortgage tables – but they come with fees of £1,545. 

All of these deals are all available on loans of up to £500,000, but opting for the lowest rate (even if you have to fork out for a fee) makes more sense the more you need to borrow. Do your sums or call our partner mortgage broker, London & Country, on 0844 209 8725 to help you. Advice is free and you don’t have to proceed with your application. 

All Yorkshire’s new 95% deals revert to its Standard Variable Rate, currently at 4.99%, at the end of the term, and come with early repayment charges (ERCs). The good news, though, is that these ERCs are tiered, which means the further you get through the deal’s term, the less it will cost you to leave. 

What other 95% deals are available? 

These deals are great when it comes to fixing in for two or five years, but if you want a compromise between these timeframes, there are other attractive options. 

Over three years for example, Yorkshire and Clydesdale banks are offering a fixed rate priced at 4.99%. It's a three-year deal ending until December 31, 2016 and is market leading over the term. The lenders (both owned by National Australia Bank) improved this deal after the second phase of Help to Buy was launched in October – but, again, it’s not part of the scheme. There are no fees to pay and you will get £250 cashback on completion. You can read more about this deal with our article Grab a best-buy mortgage with a 5% deposit

The mortgages mentioned above appear better value than the first two Help to Buy offerings. Halifax for example, has a two-year fixed rate deal under the scheme priced at 5.19% with a £995 fee, while RBSand NatWest are offering a two-year fixed rate at 4.99%, with no fee. 

However, on Thursday, November 21, HSBC announced its first Help to Buy mortgage offerings - which are looking like a lot better value. For as 5% deposit, the bank is offering a two-year fixed rate mortgage priced at 4.79% or a five-year deal priced at 4.99%, both with a small £99 booking fee. More lenders are also set to disclose their Help to Buy deals in the New Year, so keep an eye out for those. 

A brighter future 

Both HSBC's and Yorkshire Building Society’s latest deals spell good news for homebuyers who can only muster a 5% deposit as rivals Santander and Woolwich (the lending arm of Barclays) are all expected to offer their own deals in the next few weeks. 

With competition heating up, the 95% mortgage market is really getting back on its feet, which is especially good news for first-time buyers. 

Chris Pilling, chief executive at Yorkshire Building Society group, said: “House prices have stabilised and improved recently to make this the right time for us to offer such a wide selection of competitive 95% mortgages. Our fundamental role as a building society is to support, in a responsible and prudent way, as many people as possible to achieve their aspirations to buy their own home… and our new 95% deals will allow us to help even more first-time buyers.” 

Take a breath 

While mortgage lenders will still employ their own calculations about the actual size of loan you could qualify for, it’s still worth doing your own sums as borrowing 95% of a property’s value (which, remember, could fluctuate) is a big decision. Check out our dedicated first-time buyer hub and have a play with our mortgage calculator to see what different loans will cost you each month. 

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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