Will all 75% plus mortgages be forced into the government's new scheme ?

mail2z

I presume that the mortgage lenders will have some internal mechanism to protect the higher LTV products (some kind of insurance), I think the government is going to be providing that insurance which in a point will reduce the cost of the loan to the mortgage lenders. Hopefully they will pass this on the borrower.

So technically this should reduce the interest rate on higher LTV products. Right?

The_Grateful_Ghoul

kingstreet wrote: »

Yet again, people are confusing the current HTB Equity Loan (newbuild only) and HTB Mortgage Guarantee (newbuild & existing) which starts in January.

With MG there is no interest-free loan. It is a upto 95% mortgage with a guarantee from the Government to encourage lenders to lend more at higher LTV and with relaxed capital requirements.

Quick question....

If someone was applying for a 95% LTV mortgage now, am I right in saying if they were to wait for the HTB Mortgage Guarantee (newbuild & existing) which starts in January they would have access to much better rates in the long term?

kingstreet

I suspect not.

IMHO the rates for HTB - MG will be similar to those currently available on NewBuy products. This is a very similar scheme.

See Nationwide's for example;-

Rate, Fix for, Booking fee, Max LTV

4.34%, 2 yrs, £99, 95%

4.34%, 3 yrs, £99, 95%

4.44%, 2 yrs, £99, 95%

4.44%, 3 yrs, £99, 95%

4.54%, 5 yrs, £99, 95%

4.64%, 5 yrs, £99, 95%

The scheme is designed to increase the supply of 90%+ mortgages. The rates are similar to what you'd expect for an LTV of 85%.

The_Grateful_Ghoul

Huge thanks for your quick reply, In the next month or so I should be in the position to make a move and was starting to get confused thinking I would have more chance of being accepted if I waited until Jan.

ChopperST

Having just bought a new build it was interesting to see the mechanics at play here.

We purchased a house with a 15% deposit and negotiated an 11% reduction off the builders asking price. The scheme had just been introduced when we bought so I asked if we could use the scheme. We have taken our mortgage over 15 years and plan to overpay to be clear in 10. We considered using the help to buy loan almost as a "stooze" and would have offset the loan in savings and repaid before the 5 year interest free period expired.

When we approached the builders with this the asking price reverted to the original list price so (from our developers perspective anyway) it is clear they are loading a premium into the house price if people are using the HTB scheme, meaning they are being stung twice if they don't repay the HTB loan before the end of the interest free period.

Needless to stay we went with the 85% LTV mortgage and took the discount off the list price.