Borrowers who are searching for a mortgage with a five per cent deposit will be able to apply to the Nationwide building society. For the first time since 2008, it is offering mortgages to those borrowers with a small deposit.
The Nationwide has released an extra £1bn of funding for homebuyers with a small deposit, and first time buyers, although the loans aren’t available through the Help to Buy scheme launched by the government. The building society is offering a range of deals from a two year fixed rate of 3.99 per cent to a five-year deal from 4.79 per cent. The deals have a fixed fee of £999, although cash back of £500 is available on completion for first time buyers.
Other lenders are also offering mortgages to borrowers with a five per cent deposit, including Santander and HSBC. The products all vary, with “stepped” fixed rates and fixed rate deals from two to five years. Some of the products have fees to pay while others don’t, while cash back is available with some offers. As there are so many products at different interest rates, it is recommended that borrowers seek advice from a mortgage adviser who has completed the CeMAP training.
The managing director of mortgages at Santander, Miguel Sard, said that those people who have lower deposits will be able to find a suitable product at the moment. However, the bank has stated that it is withdrawing from the government’s Help to Buy scheme on 29th September, which is when mortgage rates could be changed.