Editor's note: This brief was summarised by The Property AI Newsroom from a report by Guardian Property. Read the original article for full details.
100% Mortgages Return for First-Time Buyers as Lenders Relax Rules
Banks and building societies are introducing more mortgage deals that require only a small deposit or none at all. Several high street lenders have launched new products aimed at first-time buyers, including 100% mortgages and low-deposit options.
Metro Bank is the latest lender to offer a mortgage allowing eligible first-time buyers to borrow up to 100% of a property's value. This follows the introduction of a new first-time buyer mortgage from Lloyds, which requires a minimum deposit of £5,000. The Lloyds deal is a five-year fixed-rate mortgage with an interest rate of 5.89% at the time of writing, available on homes worth up to £300,000. This product is also available through Halifax and mortgage brokers.
Santander has a similar offering, allowing borrowers to access up to 98% of a property's value with a five-year fixed rate of 5.49%. The maximum loan for this deal is £500,000, and the minimum deposit required is £10,000.
Skipton Building Society and Yorkshire Building Society have also introduced high loan-to-value products. Skipton's deal allows current and recent renters to borrow up to 100% of a property's value, with a maximum loan of £600,000 and rates starting at 5.55%. Yorkshire's five-year fixed deal offers up to 99% loan-to-value, with a maximum loan of £495,000 and a rate of 6.44%.
Additionally, more mortgage products are available that let buyers increase their borrowing power with the help of a relative or friend. These joint borrower, sole proprietor (JBSP) loans allow additional people to be added to the mortgage application without making them legal owners of the property. Lenders consider all incomes in the application, potentially increasing the amount that can be borrowed. Eligibility criteria for JBSP mortgages vary between lenders, with some allowing only immediate family members and others accepting other relatives or friends. All parties on the mortgage share legal responsibility for repayments.
These developments may be relevant to letting agents and inventory clerks as they could impact demand for rental properties and the profile of first-time buyers entering the market.
Source: Guardian Property