5% government mortgage guarantee

Hopkinson1

If you have the equity for a 5% deposit are you guaranteed a mortgage in April or am I looking at this wrong ? 

Surely this seems risky, or I’m assuming it’s subject to the usual checks and measures upon approval. Just seems we’d be looking at financial ruin if every joe bloggs manages to get on the ladder. 

( although I am happy it’s attainable for people struggling ) maybe I’m jealous as I’ve just parted way with a 15% deposit due to adverse haha 

GoingOn30

Don't be jealous, those with a larger deposit will still get a better rate and be better off overall, so those who can save a 10 or 15% deposit still should do so, but this will make a big difference to the market where property prices are high compared to incomes, if lenders do get on board with it and start offering decent 95%LTV products

[Deleted User]

Hopkinson1 said:

If you have the equity for a 5% deposit are you guaranteed a mortgage in April or am I looking at this wrong ? 

Surely this seems risky, or I’m assuming it’s subject to the usual checks and measures upon approval. Just seems we’d be looking at financial ruin if every joe bloggs manages to get on the ladder. 

( although I am happy it’s attainable for people struggling ) maybe I’m jealous as I’ve just parted way with a 15% deposit due to adverse haha 

Not guaranteed a mortgage no,  the credit scoring requirements will be very tight and not a sniff of adverse will get through.  Even at 10% deposit plenty people are getting rejected when they don't have any adverse just because they also don't have enough history.   

Rich2808

SpiderLegs said:

Rich2808 said:

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

In order for a 5% deposit to become a 10% deposit, house prices would need to fall by 50%.
One might suggest that that wouldn’t really help anyone, let alone FTBs.

It won't happen - but a 50% fall in prices would take us in London back to where we were in 2013 just after the Olympics. We managed to have an economy and hold the best Olympics ever on those house prices!
More seriously though how exactly is it better for someone to pay twice as much for exactly the same thing - particularly when the differential sum is so large it will take them 25-30 years to pay of.
Why would you want to pay £200,000 for a flat - when you could buy it for £400,000 - not sure if I quite follow the logic?

There was a large fall in prices in the early 1990s - it was great for FTBs as they could pick up some up great bargains.
You want to keep your housing wealth - great - but that is of course being achieved at the expense of young people starting out. So lets not pretend it is their interests to keep those prices high - it isn't!

SpiderLegs

Rich2808 said:

SpiderLegs said:

Rich2808 said:

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

In order for a 5% deposit to become a 10% deposit, house prices would need to fall by 50%.
One might suggest that that wouldn’t really help anyone, let alone FTBs.

It won't happen - but a 50% fall in prices would take us in London back to where we were in 2013 just after the Olympics. We managed to have an economy and hold the best Olympics ever on those house prices!
More seriously though how exactly is it better for someone to pay twice as much for exactly the same thing - particularly when the differential sum is so large it will take them 25-30 years to pay of.
Why would you want to pay £200,000 for a flat - when you could buy it for £400,000 - not sure if I quite follow the logic?

There was a large fall in prices in the early 1990s - it was great for FTBs as they could pick up some up great bargains.
You want to keep your housing wealth - great - but that is of course being achieved at the expense of young people starting out. So lets not pretend it is their interests to keep those prices high - it isn't!

Why is it that whenever someone disagrees with the (usually) badly thought through suggestions as to how and why we need a massive crash in house prices, the same line gets trotted out about people just wanting to keep their apparent vast amount of equity?
it’s not a binary choice you know. It is possible to think that things are not great for some people in some areas, but that doesn’t mean the solution is to massacre the rest of the economy.

I don’t remember the 90s fall, or 2008 being particularly great for anyone who ended up in negative equity or lost their job.

And as always, the people who get hurt most by a crash are those who recently joined the housing ladder. So that means pretty much any young person who was a FTB in the previous 5 or so years takes the pain, whereas those who you really want to punish (low LTV or mortgage free) simply ride it out and wait for the recovery.

Mickey666

Rich2808 said:

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

Point missed!

"The rich" don't need mortgages do they? 

Mickey666

So now that buyers will only need a 5% deposit get a mortgage, what happens during the conveyancing process and the the solicitor asks for the traditional 10% deposit on exchange?

Presumably, that will have to be reduced to 5% because where will someone needing a 95% mortgage get a 10% deposit from?

Personally, as someone who has hever paid a 10% deposit on exchange for any of the houses I've bought, I'd say this is a good thing.  After all, there's no LEGAL requirement to pay a 10% deposit on exchange is there?  It can be whatever the buyer & seller agree, even though the convention is 10%.

ratechaser

Mickey666 said:

Rich2808 said:

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

Point missed!

"The rich" don't need mortgages do they? 

Well I'm hoping the bubble will last until I downsize from my current mansion, at around the same time my kids start thinking about buying their first place.

But I won't get that lucky of course 

Thrugelmir

Mickey666 said:

So now that buyers will only need a 5% deposit get a mortgage, what happens during the conveyancing process and the the solicitor asks for the traditional 10% deposit on exchange?

The parties concerned will need to agree to accept the smaller amount, as always is the case already. 

indigoblue11

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.