March: Loans for first-time buyers now accessible with a minimum deposit of £5,000.

Jo Thornhill reports that Yorkshire Building Society is introducing a new offer specifically designed for first-time homebuyers, allowing them to enter the property market with a just £5,000 deposit. The loan with a fixed interest rate for a duration of five years is accessible to individuals purchasing a property for the first time. The loan carries an interest rate of 5.99% and does not include any additional charges. Yorkshire Bank would consider applications from borrowers residing in England, Scotland, and Wales, provided they possess a cash deposit of £5,000 and want to acquire a property valued at a maximum of £500,000.

This implies that borrowers have the capacity to borrow as much as 99% of the value of a property. The offer excludes the acquisition of apartments or newly constructed properties, and the organization has said that loans are contingent upon thorough credit evaluation and affordability assessments. For an individual purchasing a standard property for first-time buyers priced at £200,000, a deposit of £5,000 would represent 2.5% of the total cost, while the remaining 97.5% would be obtained by borrowing.

The deal is accessible to consumers both directly and through brokers via Accord Mortgages, the lender’s dedicated intermediary division. According to Ben Merritt, the director of mortgages for Yorkshire, implementing a £5,000 deposit requirement might reduce the time it takes for first-time buyers to become eligible for a mortgage. Additionally, this measure would promote fairness for individuals who do not have financial assistance from their relatives to rely on. According to David Hollingworth, a broker at L&C Mortgages, the introduction of this innovation is a positive development. While it may not be suitable for everyone, it provides an additional option for first-time buyers who are struggling financially.

“This solution is not suitable for individuals who cannot afford to pay for a mortgage. However, it is ideal for those who have the financial means to take on a mortgage but are hindered by the requirement to save a larger down payment.” Consequently, it could expedite the process of purchasing a property, providing assurance of long-term occupancy and preventing the aggravation of escalating house prices that may become unaffordable while individuals are saving.