Boris's 95% Mortgage Announcement For First Time Buyers?

Posted by Mortgage Squared on 14th October 2020 -

Is Boris’s 95% Mortgage Announcement a Good Move?

For first time buyers, getting that first step onto the property ladder can seem like a giant leap these days. Being a first time buyer and not being able to save up a deposit could be disheartening. It might seem that your dream of home ownership coming true is something that might only happen in the distant future.

Well, here at Mortgage Squared have some good news for you. The Prime Minister, Boris Johnson, looks like he is trying to give you a leg up. We were catching up with the digital Conservative Party conference and Boris has declared that he wants to relax stringent rules on deposits and mortgages for first-time buyers.

FROM “GENERATION RENT” TO “GENERATION BUY”

In the current COVID-19 climate, typically, you’ll need to find a deposit that is between 15 and 20 per cent of the price of the property.

It has become more difficult just recently, with lenders becoming much more risk averse. This is particularly true in the first-time buyer market and moving away from low-deposit mortgages.

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It is a shame because many people who can actually manage a monthly mortgage repayment can’t afford a deposit for a property in the first place. You may have found your perfect home but until you can find thousands of pounds for the deposit, that move is out of the question.

The Prime Minister’s speech seems like a welcome move, and if it works, could turn many people from renters into homeowners. From “generation rent” to “generation buy”.

A SOLUTION WITH A PROBLEM FOR FIRST TIME BUYERS?

But there’s a potential problem. Boris’s words were welcomed by many, although several commentators noted that it was short on detail. Yes, it grabs the headlines, but what are the mechanics of it all?

Will you, wanting to buy a house be eligible for a 95 per cent mortgage. Or will there be some criteria that will still prevent you getting on the property ladder?

Will the banks be expected to take all the risks, or will the Government step in and be a guarantor?

And will banks, who are still smarting from losses incurred years ago, be willing to offer the mortgages in the first place. Particularly if they are now lending in a more responsible manner?

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Whatever happens, it looks like the Government is trying to do something, but we await the full details.

HELP IS OUT THERE, AND IT HAS BEEN EXTENDED FOR FIRST TIME BUYERS

As a first-time buyer, there is still help and support for you.

Help to Buy is a scheme that started with the government lending “first-time buyers and existing homeowners’ money to buy a newly-built home”. It proved very popular when it was first launched. We saw a few purchases using this initiative, particularly as people only needed a five per cent deposit.

The Government has now confirmed that a new Help to Buy: Equity Loan scheme “open to first-time buyers only will be available for two years from 1 April 2021. The Help to Buy scheme will end on 31 March 2023”.

In effect, you put down a five per cent deposit, the Government provides a 20 per cent loan, and you find a mortgage for the remainder.

There are all sorts of different limits based on UK regions, and there are strict rules that come with it.

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ARE YOU A FIRST TIME BUYER AND STILL SAVING?

It might be that as a first-time buyer, you don’t want to get involved in these schemes. Your heart maybe set on raising a larger deposit.

It takes hard work and discipline to put aside thousands of pounds, but it can be done. We have seen a few people do it too even though they are getting into property for the very first time.

From saving a percentage of your monthly wages, to selling items online, to taking extra part-time work or even moving back in with Mum and Dad. It can be a hard slog, but you have to think of the end result – a house of your dreams that belongs to you.

If you need more advice on this, our team at Mortgage Squared have plenty of experience, so can offer you some tips.

Email us at [email protected] or call 08081551807 and find out how we at can get you moving!