The deal will allow homeowners to borrow up to 99 per cent of the property’s value, with a low deposit.For example, if a first-time buyer decides to buy a property costing £200,000, the £5,000 deposit will equate to 2.5 per cent of the purchase price. The remaining 97.5 per cent will be borrowed as a five year fixed-rate mortgage of 5.99 per cent.
However, there is a catch. The mortgage isn’t available for new-build properties or flats, and the maximum age at the end of mortgage term is 70.The rate of 5.99 per cent is also not the most competitive on the market. The average five-year fixed mortgage rate is 5.4 per cent. The new mortgage deal is likely to benefit high earners with a good credit score but who are struggling to save for a deposit, according to Nicholas Mendes, from brokers John Charcol.
The Chancellor reportedly ditched the idea of the Government offering 1 per cent mortgages ahead of the Budget after backlash from lenders who warned there would be a surge in mortgage defaults.: “The Government decided against backing the 1 per cent deposit scheme in the recent budget so it seems like Yorkshire Building Society has launched it anyway.