Saving for a mortgage deposit can be hard work, especially for first-time buyers. This month the new Government backed 95% mortgage scheme launches, which could offer a welcome gateway for those looking to become homeowners in 2021.
What is a 95% mortgage?
A secured loan that covers 95% of the property’s value, with a 95% mortgage you only need to have a 5% deposit. Benefiting first time buyers, especially those struggling to save the standard 10% deposit amount, but also open to any home mover across the UK.
How is the Government involved in this scheme?
The Mortgage Guarantee Scheme was initiated by the Government to help more of the nation get on the housing ladder. Announced during the Spring Budget, it is a push to urge more banks to offer 95% mortgages once again. If a homeowner were to default on a 95% mortgage the Government will partially compensate the lender, making the mortgage less riskier for them.
Can I apply?
If you are a first time buyer or looking to buy a property to live yourself, up to the value of £600,000 in the UK, then you are eligible for the scheme. When deciding whether to approve a 95% mortgage, the lender will review the following criteria:
Credit score
Your credit score is a hugely important number when it comes to mortgage eligibility. It illustrates to lenders whether you have managed credit responsibly in the past, and the healthier it can be, the better when it comes to applying for a 95% mortgage.
Checking your credit score and working to improve its health is something we encourage from the moment you decide that moving or buying a house is on the cards. For advice and top tips on making immediate improvements, why not read our helpful guide to improving your credit score.
Affordability
As with any mortgage, affordability checks are carried out to determine if you can afford to borrow 95% of the property purchase value. Lenders will ask for evidence of your income, if you have any dependants, and a list of your monthly expenditure. This includes your living costs, bill outgoings and your debt repayments for credit cards and loans.
Is there a catch?
A 95% mortgage is unlikely to offer you the lowest interest rates on the market, however, working with an experienced mortgage consultant will help get you the most suitable 95% mortgage available. UK house prices are also continuing to rise following people’s desire to improve their home environments post-pandemic.
Open your gateway to getting a mortgage
If you’d like to take advantage of the Government Mortgage Scheme and are a bit unsure where to start, then book an online appointment with Skyline Mortgage Consultant, Tony today to talk through your options.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Our range of processing and administration fees, payable on application, should you ask us to arrange your residential or buy-to-let mortgage is £395.
Source: gov.uk