Advantages and disadvantages of the new government sponsored 95% mortgages.

With the guarantee provided by the government lenders have started to offer 95% mortgages again. Even better news is that the scheme is not restricted to new builds.  

It is thought that over 70% of private renters and those living with parents are saving for a deposit to buy a home.  In the UK homeownership is still a goal to strive for. 

Advantages 

Available to both first time buyers and home movers.

Property values up to £600,000. 

Scheme available until 31st December 2022.

Available to non-new builds.  So will offer a wider selection of properties to choose from.  

Disadvantages

No new build property. 

Value of property limited to income multiples and cannot be just a share or topped up with a loan such as a Help to buy purchases.  Complete our affordability form to get an accurate maximum loan availability. 

Higher rates – under the scheme the lowest rates currently available is around 3.75% for a 95% loan.  Rates may fall if more lenders join the scheme. 

Compare that with a 90% mortgage with 10% deposit.  The lowest rates are around 2.99% for a 2 yr fixed.  

Lower income multiples.  Maximum may be around 4.5x income.  Compared to one high street lender offering 5.5x income at 90% if you take a 5 or 10 year fixed rate.