Leeds Building Society has today (12 March) claimed to be the first lender in the mortgage market to accept remortgage applications from Help to Buy equity borrowers.
A Help to Buy equity loan is where the government lends up to 20 per cent of the cost of the new-build home, meaning borrowers will only need a 5 per cent cash deposit as well as a 75 per cent mortgage to make up the rest.
The building society will accept remortgages on its existing Help to Buy products, including a two-year discount Help to Buy mortgage at 1.99 per cent, available up to 75 per cent loan to value; a two year fixed rate Help to Buy mortgage at 2.34 per cent, available up to 75 per cent LTV; and a five year fixed rate Help to Buy mortgage at 2.99 per cent, available up to 75 per cent.
Help to Buy homeowners will be offered the opportunity to remortgage to a “competitive rate” and retain their existing loan size, subject to valuation, keeping the government equity loan.
Alternatively, they can choose to redeem the government equity loan as part of their remortgage, up to 90 per cent LTV and buy the property outright.
Martin Richardson, Leeds Building Society’s general manager for business development, said that now is an ideal time to remortgage as rates have never been lower.
“When Help to Buy Equity was launched in May 2013, the average two year fixed rate mortgage was 3.8 per cent, but by February 2015 this had fallen to 3.14 per cent. In an average £140,000 mortgage with a 25 year term this would bring down monthly repayments by more than £49 per month.
“In addition, the benefits of a low £199 fee and a free valuation reduce upfront costs for the type of borrowers that Help to Buy was introduced to support.”
John Wakefield of New Homes Mortgage Services, commented that this is a sign of a return to normality in the lending market.
“Leeds is a top five building society providing innovative products to help clients meet changes in their personal circumstances, and allowing Help to Buy Equity customers to re-mortgage is a welcome addition.”
Jeremy Duncombe, director at Legal and General Mortgage Club, added: “Many Help to Buy customers face a difficult choice when their initial mortgage deal ends, and these options allow them to consider the best alternative for them.
“Hopefully other lenders will follow suit.”
ruth.gillbe@ft.com
