The Yorkshire Building Society has unveiled a new £5k deposit mortgage option, which carries no fees!
This mortgage is available for purchasing homes valued up to £500,000, offering a 99% loan-to-value ratio without relying on government-provided assistance.
Buyers will face a fixed interest rate of 5.99% over a five-year period, and they can access this mortgage through Accord Mortgages, the intermediaries division of the lender.
The £5k deposit mortgage is not applicable for the purchase of new build properties or apartments.
Ben Merritt from the Yorkshire Building Society emphasized that while the £5,000 deposit equates to a mere 1% for those who need the full borrowing amount, applicants must still invest their own funds in a deposit. To qualify for this mortgage, they must exhibit solid credit and pass stringent affordability checks.
He reiterated the institution’s responsibility to promote fiscal prudence among mortgage borrowers.
Mark Harris, head of SPF Private Clients, expressed his approval for this innovative, £5k deposit mortgage solution.
Harris recognized that excessive rent costs make it tough for first home buyers to save for a deposit, praising the £5k deposit mortgage product’s creativity. Yet, he stressed that borrowers must satisfy rigorous affordability and credit checks, especially when taking out loans exceeding 95% LTV. Harris also pointed out the exclusions of purchasing flats or new-build properties, which are typically riskier in market downturns, and the cap on property values at £500,000. Moreover, buyers are required to choose a five-year fixed-rate plan.
Harris argued for the fairness of allowing individuals without family financial support to be able to own a home rather than rent indefinitely. He acknowledged the increased risk of negative equity with high borrowing but remained optimistic about property values increasing over the five-year period. With borrowers repaying some of the principal amount monthly in addition to interest, their equity share should improve.
While critics may worry about homeowners’ ability to make payments in case of job loss, Harris noted that this concern applies equally to renters, whose options may also be limited if they cannot turn to family for support.
For more information, visit the Yorkshire Building Society website.