95% Mortgages Return for First Time Buyers & Homemovers

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The COVID-19 pandemic has led to a reduction in the availability of high loan-to-value (LTV) mortgage products, particularly for prospective homebuyers with only a 5% deposit. This has left many hard-working households unable to get onto the housing ladder. In today’s Budget the government has therefore announced a mortgage guarantee scheme to support a new generation in realising the dream of home ownership.

It will give buyers – both first-time and existing – the option to put down a 5 per cent deposit on a home with a value of up to £600,000.

Are you eligible?

The scheme is designed to help creditworthy households struggling to save for the higher mortgage deposits required by lenders in the current environment. For this reason, a mortgage eligible for a guarantee under the scheme will need to:

  • be a residential mortgage (not second homes) and not buy-to-let
  • be taken out by an individual or individuals rather than an incorporated company
  • be on a property in the UK with purchase value of £600,000 or less
  • have a loan-to-value of between 91 per cent and 95 per cent
  • be originated between the dates specified by the scheme
  • be a repayment mortgage and not interest-only and
  • meet standard requirements in terms of the assessment of the borrower’s ability to pay the mortgage, for example a loan-to-income and credit score test

Source:  The mortgage guarantee scheme outline, gov.uk, March 2021

The scheme is intended as a temporary measure. It will be open for new mortgage applications from April 2021 to December 2022.

Looking for advice?

For more information and advice on which mortgage lenders are taking part in the scheme, speak to our award-winning expert mortgage advisers at Aberdeen Mortgage Company. Call 01224 316200 or fill in our online enquiry form.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

This firm charges a fee of up to £595 for mortgage advice. The fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Aberdeen Mortgage Company is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority

What is the First Home Fund?

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The First Home Fund is a £200 million shared equity pilot scheme to provide first-time buyers with up to £25,000 to help them buy a home.

It is open to all first-time buyers in Scotland and can be used to help buy both new build and existing properties.

The First Home Fund is run by the Scottish Government and aims to help first-time home buyers purchase a property. Up to £25,000 is available to all first-time buyers towards the purchase of both new build and existing properties. A first-time buyer is anyone who does not own, or has previously owned, a property in Scotland or anywhere else in the world.

In order to take part in the scheme, you will be required to provide a minimum deposit of 5% (subject to individual lender requirements, but any amount over valuation must be cash funded) and your mortgage must be at least 25% of the purchase price. Although the Scottish Government will have an equity share in the property, you will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.

Example from Scottish Government website, February 2021

What you need to know

  • The maximum contribution from the Scottish Government is £25,000 or up to 49% of the property valuation figure or the purchase price (whichever is lower).
  • There is a limit of one application per property. You can submit a joint application however you will be limited to one award of £25,000.
  • Your mortgage must be at least 25% of the purchase price.
  • The property must be the sole residence of all applicants.
  • The scheme is not available for buy-to-let properties.

To find out more about what you can borrow as a first time buyer, speak to our expert mortgage advisers today. Call 01224 316200 or fill in our online enquiry form.

Who is Aberdeen Mortgage Company?

Aberdeen Mortgage Company (AMC) are award-winning mortgage and protection experts. We have helped clients throughout Aberdeenshire secure the property of their dreams. AMC caters for a range of clients and property, be it first time buyers looking at a new build or experienced landlords expanding their buy to let portfolio. Beyond mortgages, Aberdeen Mortgage Company also advises on home insurance as well as life protection.

Your home may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £595 for mortgage advice. The amount of fee will depend on your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Aberdeen Mortgage Company is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority

COVID-19: What would a negative interest rate mean for your mortgage?

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The Bank of England has recently written to all banks and building societies to check whether they could pass on negative interest rates if the bank cut the current base rate of 0.1%.

According to the chairman of Natwest Howard Davies, Britain’s banks are not ready for negative interest rates, with technical and contractual issues aplenty.

The Bank of England governor, Andrew Bailey, also stated that he did not know whether high street bank computer systems could cope with minus figures.

But the main highlight for those who are looking to buy a house, remortgage or switch rate need to know that a negative interest rate doesn’t automatically translate to mortgage rates of similar levels.

Is your mortgage rate due to expire?

Mortgage rates are currently low, but it does look like they could be increasing. In fact figures published by the latest Moneyfacts UK Mortgage Trends Treasury Report show that some mortgage rates have increased for the third consecutive month*.

Homeowners looking to remortgage should speak to a mortgage broker who will be able to provide information and advice on the best options available for individual circumstances.

Don’t hang about, speak with a specialist who can analyse what’s best for your mortgage. Speak to an expert adviser today call 01224 316200 or fill in our online enquiry form.

*https://moneyfacts.co.uk/news/mortgages/mortgage-rates-rise-for-third-consecutive-month/

COVID-19: Mortgage Payment Holidays ending 31st October

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The Financial Conduct Authority (FCA) has stated that COVID mortgage payment holidays in the UK will not extend past the 31 October 2020 and any financial support past that point will be marked on credit files.

The FCA has emphasised that both a payment holiday and partial payment holiday are temporary, and the outstanding amount will need to be paid back at a later date. Interest will also continue to build during this time and repayments may be higher after the payment holiday according to the FCA.

Mortgage payment holidays have proved a vital lifeline for existing homeowners who have financially suffered during the COVID-19 pandemic. However, if you did take a mortgage payment holiday, please ensure:

  • Your direct debit was not cancelled.
  • There are sufficient funds in your account ready for collection.
  • If you are concerned about affordability, contact your lender immediately.

It is important to know that if you need financial support from your lender after 31st October, it will be marked on your credit file. Homeowners should only utilise the mortgage payment holiday if it is necessary.

For existing homeowners, now could also be a good time to think about remortgaging. Guidance from UK Finance states that homeowners remortgaging with the same lender (known as a product transfer) will be able to do so even if they have a payment holiday in place. Existing customers who have been furloughed will also be eligible for product transfers.

Speak to an expert mortgage adviser today – call 01224 316 200 or fill in our online enquiry form.

What the Land & Buildings Transaction Tax cut means for Your Mortgage

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For Scotland, a cut to the Land and Buildings Transaction Tax will be introduced from Wednesday 15th July, remaining in place until 31st March 2021.

The changes will mean that the starting point for paying the LBTT on house purchases will rise from £145,000 to £250,000.

Home movers purchasing a property costing more than £250,000 will save £2,100.

In addition, an extra £50 million is being added to the First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to buy a property.

For England and Northern Ireland, the government has scrapped stamp duty on house purchases of up to £500,000, potentially saving homebuyers thousands of pounds. This tax cut is to last until the 30th June 2021.

Previously stamp duty kicked in at £125,000 (or £300,000 for first time buyers) meaning you can make significant savings if looking at purchasing or moving home this year. These new rates will also remain available until 31st March 2021

For more information on how it affects your mortgage, speak to our expert mortgage advisers today – call 01224 316200 or fill in our online enquiry form.