Mortgages  

HTB mortgages from Leeds BS aimed at London market

Leeds Building Society has rolled out a duo of loans for the Government’s expanded London help-to-buy (HTB) equity scheme for first-time buyers based in the capital.

The lender has launched a two-year fixed-rate mortgage at 1.79 per cent, with a £799 fee, and a five-year fix at 2.45 per cent with a £199 fee.

Under the original HTB scheme, London’s first-time buyers could put down a 5 per cent deposit and obtain a loan – interest-free for five years – from the Government of up to 20 per cent of the property value on new-builds with a purchase price up to £600,000.

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Following a review of the initiative unveiled in the Autumn Statement, the Government now offers loans of up to 40 per cent – as long as the borrower can stump up a 5 per cent deposit.

The lender was part of the original HTB equity scheme since the summer of 2013, and last year became the first lender to accept remortgage applications from HTB equity borrowers.

Provider view

Martin Richardson, Leeds Building Society’s director of business development, said: “We encourage efforts to help more people – including first-time buyers – to have the homes they want, and look forward to continuing the success of our involvement in HTB1 in England, Scotland and Wales.

“This latest development of the scheme in London makes help-to-buy a practical solution in the capital, where the average house price is almost 18 times the average salary.

“Affordable housing in London has typically relied on shared ownership, and HTB London complements our extensive range of shared ownership mortgages, providing additional choice for consumers.

“In addition to shared ownership and higher loan-to-value traditional mortgages, we offer our award-winning Welcome Mortgage, with a competitive fixed rate and the choice of three or six months at the start of the home loan where the borrower pays 0 per cent interest.”

Adviser view

Georgina Partridge, founding partner and head of marketing at London-based Plutus Wealth Management, said: “The rates for both products sound very good. With help-to-buy mortgages, the rates tend to be higher than standard residential mortgages because of the privilege of receiving a government top-up loan. The product fees here are fine – not too expensive for first-time buyers.

“It makes sense to have a different scheme in place for London because property prices are particularly high here. It is one step in the right direction, and it is helping first-time buyers get onto the property ladder.

“At the moment there is a limited supply of new-builds so I can imagine that being a problem, but it is a good initiative nonetheless.”

Charges

£199 and £799

Verdict

The London help-to-buy scheme is a boon for first-time buyers who have struggled to get onto the property ladder. The hike from 20 per cent to 40 per cent LTV Government-backed loan makes sense, because the cost of property in the capital is significantly higher than in most regions of the country.

Here, the products are competitive – the rates are good and the product fees are reasonable. The latter is key as most first-time buyers struggle to save for a deposit and have few pennies to spare to cover the product fee, legals and other costs associated with purchasing a property.