Yorkshire Building Society launches new mortgage deal with £5,000 deposit but homebuyers urged to ‘overpay’
The Yorkshire Building Society revealed the introduction of a fresh mortgage deal worth £5,000 as a deposit for those looking to purchase their first home.
Nonetheless, professionals are cautioning individuals to seize this opportunity to "overpay" and diminish their mortgage obligation in the long run.
In line with the banking company's statement, this proposal will possibly allow aspiring homeowners to secure a loan of up to almost the entire value of the real estate property.
A fresh agreement with no fees attached has been introduced, allowing individuals who are buying a property for the first time in England, Scotland, and Wales to provide a £5,000 deposit and take out up to 99% of the property's value.
If an individual purchases a standard property suitable for first-time buyers priced at £200,000, they will only need to pay 2.5 percent of the total cost initially.
The Yorkshire Building Society offers a deposit deal of £5,000, where the borrower will have to obtain 97.5 percent of their mortgage from a lender.
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The financial institution is providing a fresh home loan option for individuals who are buying a property for the first time.
This home loan can be obtained by clients either by working directly with Accord Mortgages, or by going through a broker. Accord Mortgages serves as the lender's intermediary-focused division.
According to Yorkshire's director of mortgages, Ben Merrit, their building society's research indicates that having £5,000 can decrease the amount of time it takes for first-time buyers to become eligible for a mortgage.
Merrit mentioned that this would promote fairness for individuals who do not have the financial backing of their families as a fallback option.
This offer is exclusively for individuals who are purchasing a home for the first time. With the deposit specified, eligible individuals may apply for a five-year fixed-rate mortgage with an interest rate of 5.99 percent.
Included in this particular service, the highest age a borrower can be upon completion of their mortgage is 70 years old. Additionally, it is not open to those interested in new properties or apartments.
Additionally, the financial institution verified that each loan will undergo thorough evaluation of creditworthiness and feasibility assessments.
Merrit emphasized the importance of promoting financial responsibility among individuals who are applying for a mortgage.
Even though £5,000 is just one percent of the total amount that borrowers can request, it is still a substantial deposit that they need to provide. Moreover, they must exhibit a high level of creditworthiness and undergo a thorough affordability check to be qualified for a mortgage with a £5,000 deposit.
The cost of obtaining a mortgage is on the increase, which is bad news for those looking to purchase a home. This is evidenced by recent data provided by Getty.
According to Rachel Springall, a finance specialist at Moneyfactscompare.co.uk, the offer is likely to receive a positive response from individuals aiming to purchase their first property.
She stated that the mortgage industry can benefit from further advancements to assist individuals who are purchasing a home for the first time. As a result, it will be intriguing to observe if other lenders will adopt similar approaches.
If someone borrows a high loan-to-value, they should consider making extra payments on their mortgage to increase their equity and try to move into a lower loan-to-value range. This can help them find better deals when they need to refinance their mortgage.
"If borrowers are worried about getting into negative equity due to a high loan-to-value deal, it's crucial that they talk to their lender and get guidance right away."
