Yorkshire Building Society launches £5,000 deposit mortgage

Yorkshire Building Society launches £5,000 deposit mortgage

0:05 AM, 28th March 2024, About 3 months ago 4

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Yorkshire Building Society (YBS) has unveiled a groundbreaking £5,000 deposit mortgage specifically designed for first-time buyers.

The unique product allows potential homeowners with the deposit to buy a property valued up to £500,000.

The building society’s research has identified £5,000 as the crucial amount that could dramatically reduce the time needed to save for a mortgage.

It says that this could benefit aspiring homeowners across the UK, particularly those in areas with high property prices.

‘Make a huge difference to first-time buyers’

The director of mortgages at YBS, Ben Merritt, said: “Our analysis showed a deposit of £5,000 – compared to a typical 5% – would make a huge difference to first-time buyers across the country by reducing the time it takes them to save up and achieve homeownership, from a maximum of 7.5 years (in London), to around 2.5 years.

“At the same time, lending responsibly is very important.

“While £5,000 represents a 1% deposit for those who need to borrow the maximum amount available, the key is that customers are still putting money into a deposit, they still have to demonstrate strong creditworthiness and pass an affordability assessment to be eligible for a £5k Deposit Mortgage.

“We have a duty to encourage financial responsibility in anyone taking out a mortgage.”

Responsible lending remains a priority

While the minimum deposit is just £1,000 for those borrowing the maximum, responsible lending remains a priority for YBS.

Borrowers must demonstrate strong creditworthiness and affordability to qualify, it warns.

The initiative aims to help those without access to family financial support.

Research conducted for the YBS ‘Home Truths’ report revealed that nearly 40% of first-time buyers rely on financial assistance from family or friends.

The report also found that a significant portion of first-time buyers believe homeownership is becoming increasingly unattainable.

The new product is available from Accord Mortgages – the lender’s intermediary-only arm.

‘First-time buyers are finding it harder than ever’

The chief executive of mortgage broker SPF Private Clients, Mark Harris, said: “Product innovation is extremely welcome, particularly when soaring rents mean first-time buyers are finding it harder than ever to raise a deposit.

“There always has to be a balance however, and borrowers will have to pass stringent affordability assessments and credit scoring, particularly if borrowing more than 95% LTV.

“There are also property exclusions, such as no flats or new builds which don’t tend to fare as well in a property downturn, while there is a maximum property value limit of £500,000.

“First-time buyers must also take out a five-year fixed-rate product.”

He added: “Ideally, there would be no need for borrowers to take on high levels of borrowing.

“However, not everyone has access to the Bank of Mum and Dad, and is it fair that if you are not in this position, you can never realistically afford to get on the housing ladder but must rent indefinitely?”

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10:27 AM, 28th March 2024, About 3 months ago

Most first time buyers will buy a flat as a first affordable step on the property ladder. But the market in flats has become stagnant due to leasehold problems e.g. high and escalating ground rents, which means lenders won't lend.

If lenders took a more realistic approach with leasehold flats, the market would open up for first time buyers and those needing to move or remortgage.

Will YBS lend on flats with these ground rent [non-] issues

alan thomas

10:57 AM, 28th March 2024, About 3 months ago

The problem is that there are not enough houses to meet the needs of our increasing population.
If there is an increase in buyers with available mortgages, they will compete for the available properties that will just increase the purchase price.

David Twitchen

15:25 PM, 28th March 2024, About 3 months ago

Did we learn nothing from sub prime lending in the USA? Those borrowers need only a 2-3% decline in their property value to be underwater and unable to refinance. 6% is too high a rate and borrowers are locked in for 5 years. This will be a future bad news story, guaranteed.


15:49 PM, 28th March 2024, About 3 months ago

Reply to the comment left by David Twitchen at 28/03/2024 - 15:25
There are hundred of thousands sitting in properties which were sold under help-to-buy, where they were given mortgages on vastly inflated valuations, which have dropped through the floor. In addition, they were leasehold, and are blighted still further by the leasehold scandal [reform to which which looks like the government has been pressured to drop!]

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