HOMEBUYERS who want certainty about the mortgage rate they’ll pay now have more options as Yorkshire Building Society has started offering deals lasting for 15 years. Earlier this month, Virgin Money became the first lender to offer home loans fixed over the time period. What are the deals? Available to both first-time buyers and existing […]
HOMEBUYERS who want certainty about the mortgage rate they’ll pay now have more options as Yorkshire Building Society has started offering deals lasting for 15 years.
Earlier this month, Virgin Money became the first lender to offer home loans fixed over the time period.
Available to both first-time buyers and existing homeowners, the mortgages at Yorkshire Building Society that require a 10 per cent deposit come with a 3.65 per cent interest rate.
If you could afford to cough up a 15 per cent deposit, you’d pay 3.09 per cent in interest at Yorkshire Building Society, while those with a 25 per cent deposit only have to pay 2.89 per cent in interest.
All 15-year-fixed mortgages at Yorkshire Building Society come with the £495 fee.
ONCE you've got your deposit together, you can start looking for a mortgage deal.
Websites like Moneysupermarket and Moneyfacts have mortgage sections so you can compare costs and all the banks and building societies have their offers available on their sites too.
If you’re getting confused by all the deals on the market, it might be worth you speaking to a mortgage broker, who will help find the best mortgage for you.
A broker will typically cost between £300 and £400 but could help you save thousands over the course of your mortgage.
You can also get advice from a digital mortgage broker for free, like Habito or Trussle.
Money.co.uk have a list of top mortgage brokers that specilise in the specifics to suit your needs.
You’ll also have to decide on if you want a fixed-deal where the interest your charged is the same for the length of the deal or a variable mortgage, where the amount you pay can change depending on the Bank of England Base Rate.
And David Hollingworth from London and Country Mortgages warned buyers not just to be swayed by the headline rate and to take into account product fees, which can typically be around £1,000.
He said: “It’s always important to shop around and have options.”
“Paying a higher rate interest rate could still work out as better overall value than paying a chunky arrangement fees.”
Virgin Money’s 10 per cent deposit mortgage with a 15-year rate comes with an interest rate of 3.75 per cent, although this doesn’t have a fee.
While Virgin Money customers with deposits of 25 per cent will pay a 2.99 per cent rate with no product fee, or there’s a deal for the same period at a lower rate of 2.75 per cent with a £995 product fee.
The lender doesn’t offer a 15-year mortgage for those with a 15 per cent deposit.
Virgin Money and Yorkshire Building Society’s rates are higher than top fixed rates mortgages with a 10 per cent deposit as the latter also offers rates of 1.79 and 2.21 per cent on two-year and five-year fixes, according to broker L&C Mortgages.
Although these deals come with fees of £1,495 so carefully calculate what is the best option for you in advance.
Both lenders allow you to take the mortgage with you if you move home before the fixed period ends without being hit with exit charges as long as you meet certain criteria at the time of the move.
But if you decide to leave any of them early, you’ll be slapped with hefty charges.
Yorkshire Building Society’s fees start at 6 per cent of the outstanding loan balance for the first five years, and then drop to 5 per cent for the following four years.
After this, it reduces to 4 per cent between year ten and 11, to 3 per cent in year 12 and 13, to 2.5 per cent in year 14 and 1.5 per cent in the final year before the deal ends.
Virgin Money’s exit charges are higher, starting at 8 per cent in the first five years.
They then drop to 7 per cent between years six and ten, to 5 per cent in years 11 and 12, to 3 per cent in year 13, to 2 per cent in year 14, and then finally to 1 per cent in the last year.
Homebuyers could save in the long-term if interest rates rise over the next 15 years with the long fixes, while they may also give you a peace of mind in this current time of uncertainty.
GETTING on the property ladder can feel like a grim task but there are schemes out there to help first-time buyers own their own home.
Help to Buy ISA – It’s a tax-free savings account where for every £200 you save, the government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime ISA – Another government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest here.
Yet no-one can predict the future so there’s no guarantee that interest rates won’t actually fall.
David Hollingworth of L&C Mortgages told The Sun: “Although ten year fixed rates have been growing in number, anything offering the chance to lock in for longer has been limited to the recent launch by Virgin Money.
“Yorkshire’s launch brings an alternative option for those interested in locking down their mortgage rate over the long term.
“Those keen to know where they stand over the longer term may be attracted by the chance to insulate themselves from the ups and downs of interest rate movements and know exactly where they stand.”
Mike Scott, property expert at estate agency Yopa, added that both deals are “worth a look” if you’re planning to stay put for a long period of time.
He said: “You will pay more in the short-term than for a shorter fixed rate, which can charge as little as 1.5 per cent annual interest for a two-year period with a large deposit, but you will be vulnerable to interest rate rises.”
If you think you might need to end the mortgage early, it’s worth looking at Yorkshire Building Society rather than Virgin Money, as its early repayment charges are significantly lower, he added.
Earlier this month, Tipton and Coseley Building Society launched a new top-paying 2.6 per cent Help to Buy Isa.
And in June, Loughborough Building Society became the latest lender to offer a mortgage that lets buyers borrow up to 5.5 times their salary.
Meanwhile, first-time buyers can borrow £500,000 with NO deposit at Barclays, as long as a family member contributes 10 per cent of the property purchase price from their owns savings.
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