95% mortgages are back

If you’re looking to jump onto the housing ladder or if you’re an existing homeowner keen to find somewhere new, you’ll be pleased to know that making the move to a brand-new home is more affordable than you might think.

Schemes such as Shared Ownership (England) and Shared Equity (Scotland) are already putting the dream of owning a brand-new home firmly within people’s reach and with a raft of 95% mortgages available now as well, it’s a good time to be stepping up the search for your perfect pad.

With Halifax having recently announced it will be returning to 95% lending, we asked Mortgage Advice Bureau (MAB) if they could take us through the new range of products and what they mean for potential customers.

MAB’s New Build Team Manager Jack Wilson (pictured below) explains:

“On 1 July, Halifax increased the maximum Loan-to-Value (LTV) – the ratio of what you borrow as a mortgage against the value of your property – from 90% to 95%.

“It’s great news for buyers,” he goes on “who could now potentially secure a mortgage with as little as a 5% deposit when buying a new-build property or any home covered by the Shared Ownership or Discount to Open Market schemes.”

MAB have also compiled a handy checklist of the lending criteria for each of the new 95% LTV products:

New-build homes

• The maximum LTV available for the purchase of new-build houses/bungalows is being increased to 95%.
• Minimum 5% personal deposit is required.
• Cash incentives are acceptable provided the loan, cash incentive and any product fee (added together) do not exceed 95%.
• Maximum loan amount of £570,000.
• This must be your only residence and you must not have an interest in any other properties such as second loan or Buy to Let.
• An enhanced credit score requirement will be applied to your application.
• A maximum 4.49x Loan-to-Income (LTI) cap will be applied as part of your affordability assessment.

Shared Ownership scheme

• This increases the maximum LTV to 95% of your share.
• New-build conversion or renovation will remain restricted to 80% LTV.
• You must pay a minimum 5% personal deposit of the share being purchased.
• Cash incentives are acceptable provided the total value of the loan plus incentive, and any product fee being added together, does not exceed 95% of the value of the share being purchased.

Discount to Open Market scheme

• The maximum LTV is being increased from 90% to 95% of the discounted purchase price, i.e. the personal deposit required is being reduced from 10% to a minimum 5%.

“The fact that Halifax has re-introduced a series of 95% LTV products isn’t just great for buyers,” Jack observes, “it shows confidence in the market as well.

“Hopefully, this means we’ll see more lenders following suit and increasing the amount of 95% mortgages they make available to customers.”

He concludes: “For anyone looking to move home, we would always encourage speaking to a certified mortgage broker who will be able to help in finding the mortgage that’s right for them.”

In the meantime, why not start the search for your beautiful brand-new home?

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