95% Halifax Mortgages for Help To Buy 2 Mortgage Guarantee Scheme
It has been an exciting week as more and more lenders scramble to grab headlines by expressing their willingness to participate in the Help To Buy 2 Mortgage Guarantee Scheme. We have heard that Aldermore, Barclays, Halifax, HSBC, Lloyds, NatWest, RBS, Santander and new lender TSB will take part.
The funds for the Help to Buy 2 Mortgage Guarantee Scheme are not actually available for drawdown until January 2014 so the majority of lenders above are saying they will launch their products then. This will give them a greater time to sort out internal processing systems and also to finalise their negotiations with Government over their capital adequacy concerns. The latter is a particular issue as the Government brought in extra reserve requirements for higher loan-to-value lending post credit crunch and are now having to allow lenders to fudge the accounts so this contradictory new scheme can get off the ground.
Halifax is leading the charge with 95% mortgages for the Help To Buy 2 Mortgage Guarantee Scheme already on the shelves.
Halifax Help To Buy 2 Mortgage Guarantee 95% Products Reviewed
Halifax of course is probably the most recognisable mortgage brand in the UK and under the greatest pressure to support the Government following their high profile bail out amidst the credit crunch.
They have therefore come out of the blocks fast.
Example of Halifax Help To Buy 2 Mortgage Guarantee 95% Products
Based on a purchase price of £200,000 and a repayment mortgage of £190,000 over 25 years.
The main early repayment charges are 3% of the amount repaid to 31/12/2014, then 2% until 31/12/2015.
Products below are current as at 11 October 2013:
Product One: 2 Year Fixed – Medium Arrangement Fee
Initial pay rate 5.19% (APR 4.4)
Valuation Fee £355 / Arrangement fee £999
Fixed at £1,137.81 per month until 31/12/2015. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £1,015.27 per month.
Product Two: 2 Year Fixed – No Arrangement Fee
Initial pay rate 5.59% (APR 4.4)
Valuation Fee £355 / Arrangement fee £Nil
Fixed at £1,177.00 per month until 31/12/2015. After this period the mortgage will revert to the lender’s variable rate at the time. Based on today’s prices this would be £1,012.45 per month.
In my experience Halifax offers one of the best services around. Their underwriting policy is fair and the underwriters respond well to an adult conversation and are happy to talk over cases on their individual merits rather than apply a one size fits all approach.
Unlike its predecessor Help to Buy 1, the Help to Buy Scheme 2 is also designed to stimulate homemover market (as well as first time buyers) and as such the purchases can be as great as £600,000. This is likely to lead to mortgages in excess of £300,000 which receive extra special treatment by Halifax’s Premier Team unit.
As a Mortgage professional I have been able to persuade them to look at mortgage cases ‘outside the box’ such as self employed applicants with just one year’s accounts and those on maternity leave. And, more times than not I have been able to secure a decision in principle within 3 hours.
The mortgages are portable to a new home. The lender allows you pay off up to 10% of the capital balance per annum within the fixed period (unlimited thereafter). Unusually the overpayments can be used to take a payment break or reduce future payments.
There are better 95% mortgage products already available but these are in short supply, the credit scoring is restrictive, and may require parental reassurance.
As a general criticism, rather than one aimed directly at Halifax, until the other lenders launch their products there is a distinct lack of competition to drive prices down.
For more information on our range of Help to Buy scheme products please complete the enquiry form on the right-hand side of this page or alternatively call us on (020) 7993 2044.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
The views expressed in this article are based on my own personal general opinions and experiences, and they are not necessarily shared by Niche Advice Limited or other Mortgage Brokers. Rates correct as of 12/10/2013