MortgagesNov 22 2016

Newcastle offers raft of cuts on first-time buyer mortgages

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Newcastle offers raft of cuts on first-time buyer mortgages

Newcastle Intermediaries has made a host of cuts to rates across its suite of mortgages targeted at first-time buyers.

Highlights of the discounted range include a two-year fix to 95 per cent loan to value at 3.75 per cent with no product fee. The maximum loan amount is £350,000.

At 85 per cent LTV, a two-year fix is now available at 2.46 per cent and the five-year option is priced at 2.69 per cent. 

Both deals are fee free and come with a “range of incentives”, including free valuation. The maximum loan amount is £500,000.

In addition, the lender has introduced a new five-year fix at 4.39 per cent to 95 per cent LTV as part of its ‘All in One’ product offering. 

The maximum loan amount is £350,000.

The range boasts all standard legal costs, including land registry fees, land registry priority search, bankruptcy searches, property searches (such as local authority, water and drainage fees) and VAT.  

The lender’s minimum loan amount for the afore-mentioned products is £10,000.

Last month, the lender introduced a three-year fix exclusive to appointed representatives of Openwork.

Available up to 80 per cent LTV, the product rate is fixed at 2.05 per cent and comes with no arrangement fee.  

Free valuation and free legals are available for remortgages (or £250 cashback for purchases).  

Email: myron.jobson@ft.com

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Provider view Steve Carruthers, head of mortgage distribution, at Newcastle Intermediaries, said: “Our All in One product range is ideal for first-time buyers looking to keep the costs of purchasing their first home down, and the rate reductions will also be a benefit in keeping monthly repayments down too.

“These changes show our commitment to supporting new buyers on to the property ladder.” 

Adviser view Commenting on the ‘All in One’ five-year fix at 95 per cent LTV, Michael O’Brien, director at Essex based Access Financial Services, said: “We very rarely recommend a five-year fix at 95 per cent LTV because we have found that historically, clients have been able to secure a better deal after two years. 4.39 per cent is certainly not the best rate in the market – there are a lot of mortgages at the same loan to value priced below the four per cent figure. However, the extra incentives do make up for the high rate to an extent.

“It is a tough market for first-time buyers. It is cheaper to buy a property than it is to rent, but saving for a big enough deposit is the issue. The mortgage guarantee element of the help to buy scheme will be missed [when it is scrapped by the end of the year] but lenders have already said they will launch their own help to buy schemes to fill the void, which is a good thing.”

Charges The aforementioned products come with no completion or reservation fees.

Verdict Saving to purchase a property for the first time is not the easiest of feats. As Mr O’Brien said, saving up for a reasonable deposit is difficult. Cash deposits offer minimal returns that are increasingly subject to inflation risk.

Here, the mortgage rates look more attractive with the absence of a reservation and completion fee. For those seeking a small loan, it could be more economical to take out a fee free loan. The ‘All in One’ product is particularly noteworthy. 

There are many things to consider when buying a property for the first time and the bumper incentive package offered under the product will check a number of items off the to-do list.