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Govt's 95% mortgage scheme launches with 5 lenders

Govt's 95% mortgage scheme launches with 5 lenders
 Credit: Joe Giddens/PA Wire

The government-backed 95 per cent mortgage scheme that was announced at the Budget is available to lenders from today (April 19).

The scheme aims to help first-time buyers or homeowners obtain a mortgage with a 5 per cent deposit to buy a property of up to £600,000.

Lloyds, Santander, Barclays, HSBC and NatWest are launching mortgages under the scheme from today (April 19), with Virgin Money to follow next month.

Chancellor Rishi Sunak said: “By giving lenders the option of a government guarantee on 95 per cent mortgages, many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home.”

Under the scheme, the government will compensate the lender for a portion of the net losses suffered in the event of repossession.

The guarantee will apply down to 80 per cent of the purchase value of the guaranteed property and be valid for up to seven years after the mortgage is originated.

Santander is launching three 95 per cent LTV mortgage products for homebuyers tomorrow (April 20) as part of the guarantee scheme.

Three repayment mortgages will be available for houses priced up to £600,000, or for flats and leasehold properties priced up to £400,000.

A three- and five-year fixed rate will be available at 3.99 per cent and 4.09 per cent respectively, as well as a two-year tracker rate at 3.99 per cent.

All three products come with a free valuation and zero product fee.

Customers can apply for the mortgages via a broker, or directly with Santander by phone, video appointment or in branch.

Brad Fordham, head of mortgages at Santander, said: “We know that buying a home is expensive and finding the money for a deposit and the upfront costs can sometimes prove a barrier to potential homeowners.

“We’re pleased to be part of the government’s mortgage guarantee scheme by offering customers a range of 95 per cent LTV mortgages with the additional support of no upfront fees and a free valuation.”

Other lenders, such as Accord Mortgages and Coventry for intermediaries, returned to the 95 per cent LTV market in March ahead of the scheme’s launch.

From today (April 19) Accord has also opened up its 95 per cent LTV mortgage to homemovers in the form of a five-year fixed rate product at 3.99 per cent.

Accord said it was not using the government’s mortgage guarantee scheme for the product.

Jeremy Duncombe, managing director of Accord Mortgages, said: “We’re committed to supporting brokers and are pleased to have been able to give first-time buyers more choice, in what was a very limited market.

“We’ve been delighted with the response to our return to the 95 per cent market, and as more lenders have joined us in the market, we’re now in a position to offer it to more borrowers.”

chloe.cheung@ft.com

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