Post office details Help to Buy mortgages

The Post Office has announced details of its new Help to Buy mortgages, allowing homebuyers to bag the property they want with just a 5% deposit.

After announcing its plans to join the government-backed Help to Buy in January, the Post Office has now announced details of two 95% mortgage deals – a two-year and a five year fix. Both deals will apply to the second part of the scheme, known as mortgage guarantee.

‘Every penny counts’

On offer is a two-year fixed rate deal priced at 4.95% and a five-year fixed rate deal at 5.35%.  Neither deal charges an arrangement fee, and both revert to a variable rate of 4.49% once their fixed terms end.

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John Willcock, Head of Post Office Mortgages, said: “Every penny counts for first-time buyers looking to get on the first rung of the housing ladder. Our fee-free deals will provide a helping hand for those in need of assistance, as they seek to realise their goal of becoming a homeowner.”

As with all Help to Buy mortgages, whether they fall under the mortgage guarantee or equity loan part of the scheme, the Post Office deals are open to first-time buyers and homemovers alike on homes worth up to £600,000. And as the Post Office deals fall under the mortgage guarantee phase of Help to Buy, they are available on new-build and existing properties.

HSBC has a slightly cheaper two-year fix at 4.79% under Help to Buy but it comes with a booking fee of £99.  Similarly, HSBC offers a five-year fix at 5.19%, but with the same fee. After the fixes end, the rates revert to the bank’s variable rate of 3.94%.

Bear in mind however, not all the best deals at 95% fall under the Help to Buy scheme at all. Clydesdale and Yorkshire banks are offering a fix of 4.89% for three years as part of its standard range. There is no arrangement fee and the banks will even pay £500 cashback on completion.

For more 95% mortgage deals outside the Help to Buy scheme, check out our best buy tables.

First rung higher than you think?

Meanwhile, new research – also from Clydesdale and Yorkshire – says that first-time buyers are underestimating how long it can take to get on the property ladder.

The banks’ annual First-Time Buyers Survey found that two-thirds (67%) of those looking to buy their first home were surprised when it took up to three years longer to buy than they had anticipated. For more than a third (35%) of first time buyers, saving for a deposit took three years or more.

Andrew Pearce, Retail Director for Clydesdale and Yorkshire Banks, said: “Planning starts with saving, the sooner you start the easier it is and the less you have to put away each month. Even with 95% mortgage, the average first-timer needs to put together over £7,000 for their deposit. And that’s before the cost of valuations, legal fees and furnishing their home.”

Interested in Help to Buy? Find out more at our dedicated Help to Buy hub page.

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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