First-Time Buyer Plan 'May Allow 5% Deposits'

[Supermalt]

i need a fucking yard, gonna look more into this

[Kurtis]

dunno why i thought it was 2 years, but truesay i read it in May, and its just a savings account

Nationwide opens door for first-time buyers with 5% deposit

Building society's new Save to Buy account will enable first-time home buyers to apply for 95% loan-to-value mortgages

Nationwide building society is launching a savings account which enables first-time buyers to apply for a mortgage with just a 5% deposit.

From Friday, those aspiring to buy their own home can open a Save to Buy regular savings account which pays interest of 2.5% gross on balances up to £20,000. After at least six months of saving a minimum of £50 a month, the saver is entitled to apply for one of the Nationwide's 95% loan-to-value (LTV) ratio mortgages: until now these have only been available to existing Nationwide mortgage customers who want to move home.

The Nationwide joins a very small band of lenders prepared to extend mortgages to those with a deposit of just 5% on a relatively straightforward basis. Most others require parents or other family members to act as guarantors on the loans, or to put their own money into savings accounts which can be set against the loans in case things go wrong.

Nationwide currently offers a 95% loan fixed for three years at 6.29% and one fixed for five years at 6.89%, although the rates on offer will almost certainly have changed by the time first-time buyers qualify to apply.

Those who go on to take out a Nationwide 95% LTV mortgage will also benefit from cash back ranging from £250 for those who save from £2,500 to £4,999, to £1,000 for those who save £10,000 or more. Save to Buy customers will also qualify for any Nationwide first-time buyer deals available at the time of application, such as the current offer of a £500 discount off the product fee.

David Hollingworth of mortgage broker London & Country said aspiring buyers might be able to find better savings rates elsewhere, but added that the Nationwide's entrance to the 95% LTV market was still very welcome.

"The Nationwide is getting back to that old-fashioned condition of wanting to get some savings in and making sure the borrower is able to put money away each month. This is no bad thing," he said.

"The obvious downside is that saving in the Save to Buy account does not guarantee that you will get a mortgage. The Nationwide is simply saying that it will consider your application."

He said other lenders offering 95% LTV loans, including the Skipton building society and Yorkshire Bank, charge similar interest rates to the Nationwide, but he added that the lenders set strict criteria when considering applications. "It's not easy to get one of these loans," he said.

First-time buyers are generally considered to be the driving force behind the housing market. Their buying of a property releases homeowners to buy bigger or more expensive property, and spurs a whole chain of shopping, from house paint to white goods, that helps support the economy.

But their numbers have dropped over the past few years, as buyers have been forced out of the market by high house prices, low or non-existent salary increases and an unwillingness on the part of lenders to provide them with high LTV mortgages.

The government has put pressure on lenders to increase the number of mortgages they are making available to first-time buyers, and launched a scheme to help such buyers in the Budget. The Firstbuy scheme is open to those with a household income of less than £60,000 a year who can put down a 5% deposit – but the catch is that the mortgage must be used to buy a new home.

http://www.guardian.co.uk/money/2011/may/04/first-time-home-buyers-nationwide

[Guest M12 Part 2]

a 5% deposit is risky business. Not to mention its hard to make any real progress paying off the capital like this, All youre mortgage money just goes on ineterest payments

[Badman]

remember the days of 110% mortgages that most lenders were offering right before the recession started

Like wtf?!

[carpedeum]

If you need the deposit to go down to 5% the chances are you aint in the best position to be taking out a mortgage.

There will be some who do well out of this deal but there will be a lot of losers.

But I guess that's what the Govt and banks are counting on...

not true. the 5% deposit is a good thing, but its likely to be abused.

for many people its the saving for the deposit that takes the longest, especially if you're already renting.

someone with a stable job (if such a thing still exists), can save up much quicker and also afford the mortgage.

for people who know abou this shit

a quick question

how mch would u need for a deposit for a 300k property

like a ball park figure or a sensible sum

being a doctor = i get an awesome mortage regarrdless..

anything from 7-20% . if you have 20% then your interest will be much lower than the person with 10%,

if you're a first time buyer they may ask for nothing less than 15%

[Guest28]

can people give there reasons as to why it's not good?..or are you just saying it for the sake of it

think its coz the goverment r snakey an cant be trusted, everyone is too used getting bad news

even im saying this is to good to b true

[carpedeum]

its not good because it encourages the wrong people to think this is their golden chance

people who may not have actually done their proper homework to see what they can really afford.

like when you do your financial assessment of all your expenditure,(some people dont even do this, they just look at what they earn!!) and you have say £900 to spare after all other expenses are taken out, and with the mortgage you want your monthly payments are £800-£900.

such a person cannot afford that mortgage, and shouldn't attempt to commit to it.

but because its all there for the taking, and the dream of owning your own place they start to imagine how they can 'cut down' on other stuff, which rarely ever happens, or they look at their credit cards as a buffer for any unforeseen expenses. it just starts a downward spiral of debt which triggered the crisis in the first place.

proper advice given should be that for a mortgage of £900 your free income left after all main expenses are taken out you have £1500 as a minimum.

then you have the people who then go and fully furnish their new house(if its not furnished when you buy it) on credit. which for a 1st time buyer is just crazy imo. save, buy...save, buy, within a yr your house will be fully furnished. whats the rush?

for those on a good income and good economic sense, this is a better option than trying to save up so much

[Illusion]

Bun all the haters.

I'm gonna jump on this ting.

5% on a 39 year mortgage for the first 4 years = me

I will now be buying a yard in 2013 or late 2012.

39 year mortgage?! Fuck. That. Noise.

This policy is dumb. Housing in the UK is generally of a poor quality and is VERY overpriced. Especially in the south east. The housing market needs a crash not propping up

[Yung bawse]

I think it's a good thing in the way that it gives people an option to find the middle ground and go in at 10% which is still a conciderable amount lower than 20%

[Badman]

Bun all the haters. I'm gonna jump on this ting. 5% on a 39 year mortgage for the first 4 years = me I will now be buying a yard in 2013 or late 2012.

39 year mortgage?! Fuck. That. Noise. This policy is dumb. Housing in the UK is generally of a poor quality and is VERY overpriced. Especially in the south east. The housing market needs a crash not propping up

Im guessing the idea here is to start off on a longer repayment period and get one of them fixed interest mortgages for 3/4 years so that your repayments are smaller, albeit high interest and in that time hope that the value of ur property goes up then remortgage once the fixed period is up.

You then essentially will have a bigger capital then what you started with which = better bargaining power to get a more attractive mortgage

you will find another fixed mortgage for another few years and repeat the process but each time the monthly repayments will start to get smaller and also interest decreases

if you honour your fixed term then essentially all you have to pay to remortgage is stamp duty + lawyers fees or something along them lines which is relatively low

.....rinse + repeat etc

within 10-15 years you will be in a situation were your capital is high, monthly repayments are low and interest is also low. You will basically be paying mostly back the loan rather than interest at this point tbh

So to begin with you may be starting on some mad 35+ year mortgage but if you follow method above in reality it could take half that time

once you have a big enough capital then it also makes sence to start spreading it into more than one property then before you know it your a property investor

/

Pissed if you go into negative equity though (value of yard goes lower than when you started your fixed term) its very hard for this to happen taking inflation into account but it does still happen in some situations

[Yung bawse]

lol either some of you man are clued up or i don't know fuck all

prob both

[Aquaman]

Pissed if you go into negative equity though (value of yard goes lower than when you started your fixed term) its very hard for this to happen taking inflation into account but it does still happen in some situations

yeah like if theres a financial crisis and the price of houses slump but that never gonna happ- oh wait

[Badman]

it didnt slump lol it just went stale

/

stick to the positives of what I was trying to say only trying to help man out

[Platinum50]

Bun all the haters.

I'm gonna jump on this ting.

5% on a 39 year mortgage for the first 4 years = me

I will now be buying a yard in 2013 or late 2012.

39 year mortgage?! Fuck. That. Noise.

This policy is dumb. Housing in the UK is generally of a poor quality and is VERY overpriced. Especially in the south east. The housing market needs a crash not propping up

Thats whats needed

[MARVELL]

i got my property on 11% deposit. this is not a crazy idea but banks will just charge higher interest

if its affordable housing, then it will help some pple.

[Benicio del Toney]

If you need the deposit to go down to 5% the chances are you aint in the best position to be taking out a mortgage.

There will be some who do well out of this deal but there will be a lot of losers.

But I guess that's what the Govt and banks are counting on...

not true. the 5% deposit is a good thing

You say it's not true then you say this.

its not good because it encourages the wrong people to think this is their golden chance

As I said, there will be MANY losers.

[gemma]

There's only gonna be 3000 house available

If you're flat is £200K, 5% is still £10K. It's to help the poorest people get on the ladder

[KayGee]

Anything over renting.

[MARVELL]

nothing wrong with renting tbh. allow the hype

you spend £400 on a jacket thats really worth £30

and complain about having to rent..kmt. materialism gone mad thats all

[Zizouz]

don't know how anyone can make a commitment to live in the same house untill they retire

[Woodpecker]

u lot liv wid ur mam innit ya tramps

lol at mortgage

my philosphy

renting if you cant afford to buy lots of places around the world cash

[Zizouz]

directed at who?

[Woodpecker]

If you think you were being addressed put your hands up kids

[KayGee]

Rent at £800 for just 3years, £28,800 completely down the drain.

I rather pay higher interest on my own home than pay to stay in someones property meaning paying their mortgage off. Short term maybe, years? No way.

[Zizouz]

I'm not your kid, buddy

/

there are other things that you could do with the money you spend on the interest in that time, other than being a place to live a home doesn't give that much in terms of an investment.