Santander next to reveal Help to Buy mortgage rates

Santander has announced the mortgage deals it will be offering under the second phase of the government’s Help to Buy scheme which offers home-movers and first-time buyers the chance to move along the property ladder without a large deposit.

Unlike the first ‘equity loan’ phase of Help to Buy, which only applies to new-build homes, the second ‘mortgage guarantee’ phase applies to all property. Both parts of Help to Buy apply to all buyers – not just those buying their first home – with deposits of as little as 5% and impose a maximum property value of £600,000.

Santander’s new range of mortgage guarantee products include fixed and tracker rates starting at 4.99%. It is also the first bank to offer a tracker mortgage under Help to Buy.

Here’s a closer look at the details.

How does Help to Buy work?

Help to Buy is the government’s plan to assist people to get on (or move along) the property ladder with just a 5% deposit.

The first ‘equity loan’ phase of the scheme, only for buyers of new-build homes, was launched in April last year. The second phase launched ahead of schedule in October – when Santander also confirmed it would participate – and is available on all kinds of property so long as the value is less than £600,000.

Under the Help To Buy mortgage guarantee, the government guarantees a further 15% of a property’s value (in return for a fee) which gives banks and building societies more security to lend larger mortgages.

Three new deals

All Santander’s new mortgage deals have the advantage of coming with no booking fees, a free valuation on properties valued up to £2.5million and £250 cashback on completion, to help with the upfront costs of buying a home.

The lender already offers mortgages that only require a 10% deposit (90% loan to value) as part of its standard range and will now be using the Help to Buy mortgage guarantee to offer deals at just a 5% deposit (95% loan to value).

Its two-year tracker mortgage is charged at 4.49% above the Bank of England base rate, which currently sits at 0.5%. Meanwhile, Santander is also offering a two-year fix at 4.99% and a five-year fix at 5.49%. Each reverts to a 4.74% standard variable rate (SVR) when the term ends.

And Santander 123 Current Account customers who pay their monthly mortgage payments by direct debit will also receive 1% cashback on maximum monthly payments of £1,000.

‘A welcome return’

Announcing the product launch this week, Miguel Sard, Head of Santander Mortgages, said: “The first phase of the Government’s Help to Buy scheme has already helped improve the flow of credit to good quality customers, and played an important role in helping both first time buyers and home movers looking to buy new build properties. This has seen a welcome return of some confidence back into the market.”

“Santander is committed to helping consumers get on, and move up, the property ladder, and our new Help to Buy mortgage guarantee range is the latest addition to our competitively priced range of products.”

A Bank of England survey this week said it expects significantly more mortgages to be sold in the first three months of 2014, after demand for mortgage lending rose at its fastest pace since 2007 (when its surveys began) in the last three months of 2013.

And, according to the Council of Mortgage Lenders, mortgage lending was 30% higher in November than the same period in 2012.

You don’t HAVE to join Help to Buy if you only have a 5% deposit. There are a range of standard 95% mortgage deals available which you can compare on our tables.

UPDATE 24/04/14: Santander has increased the rate on its two-year fixed Help to Buy mortgage. It will now be priced at 5.09% to July 2, 2016.

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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