Lenders To Make First Time Buyer Mortgages More Competitive

Last Updated: 13-01-2021

Reading Time: 2 minutes

There may be some good news for those first time buyers that have grown weary of being tossed table scraps by major home lending providers.

It turns out that first time buyers – especially those that lack the cash on hand to put down weighty deposits – may finally be able to find a relatively affordable mortgage loan, even though they don’t have much in the way of a deposit amount. This is because both Halifax and First Direct recently announced that interest rates on lending products ideal for low-deposit first time buyers were being slashed.

With demand for mortgages with a high loan-to-value on the rise, both lenders have decided to step in to the rather large hole that needs to be filled. On top of that, there are some offerings that are actually free of any booking or arrangement fees!

No Fees Mortgage from Halifax

In fact, Halifax alone has reduced its two year fixed-rate mortgage rates to 3.24 per cent for deposits of 20 per cent to 25 per cent, while its 15 per cent to 20 per cent offering has likewise been scaled back to an interest rate of only 3.79 per cent; while these may not be the best deals out there at the moment when it comes to interest rates, you’d be hard-pressed to find a bank that’s willing to provide you a home loan right now without having to pay a massive booking fee, which could easily top £1,000 or more!

There’s plenty of other fish in the sea, though, when it  comes to sub-four per cent interest rate deals, especially for borrowers looking to put down a 10 per cent deposit towards the value of their home. In fact, HSBC offshoot First Direct dropped its 10 per cent deposit three year fix to 3.99 per cent, though if you want to avoid the £999 arrangement fee you would have to settle for a significantly higher 4.29 per cent rate, and its five-year fix – also at a 90 per cent LTV price point – has also been scaled back to 4.19 per cent, though you’re going to have to pay a £1,499 fee unless you take the 4.49 per cent fee-free option.

Of course, the real test will be whether there will be some decent offerings for anyone with a five per cent deposit , especially considering how the Help to Buy scheme is supposedly going to solve all our problems by offering Government guarantee on these loans.  For what it’s worth I don’t know if this programme is going to work.

Halifax paying first time buyer stamp duty

Another major incentive for first time buyers with low deposits, is Halifax offer to cover the cost of the stamp duty up to 1%. This means that Halifax will pay the stamp duty on properties between £125,000 and £250,000 for first-time buyers only. This is a great offer for contractors, potentially saving them up to £2,500.00 by not having to pay the stamp duty.

Author: John Yerou

John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.

Posted by John Yerou

on April 15th, 2013 06:00am in John’s Blog.

Call 0208 421 7545 or Request a Call Back available 8:30am – 6:30pm