Government backed 99% loan-to-value mortgages unlikely to launch but what are the low deposit alternatives?
After suggestions that a government-backed 99 per cent loan-to-value mortgage scheme would be announced in next week's Spring Budget, there seems to have been a reversal.
Government insiders told the Financial Times it is “likely” the scheme will be included in the Budget, which is due to be delivered by Chancellor Jeremy Hunt on March 6. However, on February 29, the Telegraph reported the scheme had been pulled.
The Government could offer banks financial guarantees to encourage banks and building societies to hand out mortgages covering 99 per cent of a home's value. The aim would be to help more first-time buyers onto the property ladder and out of the rental market.
Many borrowers can afford monthly mortgage repayments, as they have been paying rent but do not have a sufficiently large deposit to purchase a property.
Here are some of the other low- or no-deposit mortgages currently available.
Skipton’s no-deposit mortgage attracts nearly 500 borrowers
Skipton Building Society launched its 100% mortgage Track Record product in May as a way of helping renters with good rental payment records but little cash savings. A report in The Times says 484 borrowers have signed up.
The no-deposit mortgage is available to renters who have not owned a property in the UK in the last three years.
Sole applicants must have paid their rent for 12 months in a row within the last 18 months. For joint applicants (up to four people), evidence must be provided so that all rent has been paid either by one applicant or collectively for 12 months in a row within the last 18 months. If you've been renting separately, you can prove you have paid all your rent.
Borrowers must be aged 21 or over, have no missed payments on debts or credit commitments and borrow up to £600,000. Skipton will also not lend 100% of the mortgage for newly built flats.
Tipton is offering a 100% mortgage providing a charge is secured against the parents' property
Tipton for Intermediares offers a family-assisted mortgage, allowing you to borrow 100% of the purchase price or property value (whichever is lower) with no borrower deposit. Mum, Dad or relatives can help boost your position on the property ladder by either accepting a 20% charge of the purchase price or property value (whichever is lower) on your new home on their own property.
It is also possible to put 20% of the purchase price or property value (whichever is lower) into the Family Assist savings account, commonly known as a family savings mortgage. Mansfield Building Society also has a similar 100% mortgage.
Barclays Family Springboard offer low-deposit mortgages, providing family funds deposited in a linked account
"Climb the property ladder with a little help from your loved ones, making it easier to get your deposit together," says the Barclays website. The Family Springboard Mortgages come in two parts. The borrower takes out a Family Springboard Mortgage, while their helper opens a Helpful Start Account linked to that mortgage. The helper then puts 10% of the purchase price into the Helpful Start Account.
Barclays can offer the borrower(s) a mortgage without a deposit. The helper cannot withdraw the funds until after five years, and the ability of the helper to withdraw the funds also depends on the borrower keeping up repayments.
If three or more payments are missed, the funds will be retained until the mortgage account is up to date and there are no missed payments in the last 12 months and no more than two in the previous 60 months. If the property is repossessed, the funds will be used to clear any losses on its sale.
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The information contained within was correct at the time of publication but is subject to change.
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