95% mortgage guarantee scheme

honeywoodsix

Hi, if you already have a joint mortgage with someone, but planning to buy a home for yourself.
Would you be eligible for those 95% mortgage guarantee scheme? 

K_S

@honeywoodsix As long as it's going to be your main residence, afaik, there's nothing in the scheme rules that prohibits this scenario. Whether lenders will offer you a 95% LTV mortgage on a second home is another question

Capri84

https://www.mortgageintroducer.com/aldermore-reintroduces-95-ltv-mortgages/

Aldermore with some 95% ‘deals’

2 and 5 year fix, both above 5%

honeywoodsix

I see, what if my name was removed from the joint mortgage. Does this mean it no longer be seen as a second home?

K_S

honeywoodsix said:

I see, what if my name was removed from the joint mortgage. Does this mean it no longer be seen as a second home?

@honeywoodsix Generally speaking, if you're no longer on the mortgage and deeds, that's correct.

Just to be clear, I'm not saying that you'll *have* to do this as 95% criteria isn't out yet. I know that Santander 95% (when it comes out) will not permit any properties in the background but that might not necessarily be the case for all lenders.

[Deleted User]

honeywoodsix said:

I see, what if my name was removed from the joint mortgage. Does this mean it no longer be seen as a second home?

yes that would work.   At the moment the best ltv you can get on a 2nd residential home is 90% (subject to affordability).  If you get removed from the other property then it would no longer be a 2nd property purchase.  Would be a normal purchase.   Just FYI though, the majority of lenders are launching 95% to FTB only at the moment (that will change eventually) so you wouldnt qualify for them

honeywoodsix

@Deleted_User so even if I was to remove my name of the joint mortgage, I wouldn't still qualify for the majority lenders that are doing 95% for FTB. My thinking was, if I no longer tied to a joint mortgage, then I could be seen as an FTB

[Deleted User]

You wouldn't be a First Time Buyer as they are people who are buying a house for the first time.

Homemover 95% will expand soon enough. We saw it at 90% when they returned.  First few weeks and months were ftb only and then homemovers as well got added on

getmore4less

When (re)introducing a new product line  they will need to have some control over demand.
Start with FTB puts a limit on that initial rush.

There is probably a bit of pent up demand at 95%  so the lenders can be a bit choosy and get away with high rate for a while
There will be a limit on rates as they need to be around the cheaper than renting (if people do their sums)  

Terrace

Could I please sense check my calculations.

I do rent at the moment 1000£/month
I will have 5% deposit in April of 15000£. 

Looking to buy for 250000-300000£.

Even if interest rate is 1% higher 95% LTV then 90% LTV and there is 2year fix deals then If I buy with 95% LTV would be overpaying roughly 2500-3000£ a year. Over 2 years roughly 5000£ ( intend to overpay the mortgage)

It would take me another 7-8month to save for 10% deposit in that time I would pay another 7000-8000£ in rent.

So clearly I grab 95% LTV mortgage as soon as I potentially can.

Am I missing something? 

getmore4less

Terrace said:

Could I please sense check my calculations.

I do rent at the moment 1000£/month
I will have 5% deposit in April of 15000£. 

Looking to buy for 250000-300000£.

Even if interest rate is 1% higher 95% LTV then 90% LTV and there is 2year fix deals then If I buy with 95% LTV would be overpaying roughly 2500-3000£ a year. Over 2 years roughly 5000£ ( intend to overpay the mortgage)

It would take me another 7-8month to save for 10% deposit in that time I would pay another 7000-8000£ in rent.

So clearly I grab 95% LTV mortgage as soon as I potentially can.

Am I missing something? 

Lets go with £250k  mortgage
25 years say 4% and 5% 

amount	rate	payment	owing
£250,000.00	5.00%	£1,461.48	£239,426.74
£250,000.00	4.00%	£1,461.48	£234,332.33

You pay an extra ~£5k in interest over the 2 year fix
put the full £15k down buy at £265  LTV now ~90.2%, should be there with some overpayments


if rent is £1k and you can save £15k in 8 months(£1.875kpm) you easy have £2k to throw at the mortgage.
go with the 300k 15% deposit borrowing  £285  still using 4% and 5%

amount	rate	payment	owing
£285,000.00	5.00%	£2,000.00	£264,536.44
£285,000.00	4.00%	£2,000.00	£258,809.97

LTV 88%  need £2400pm to get to 85%LTV .