New 95% Mortgage Scheme Announced

by | Tuesday 20th Dec 2022 | Mortgage News

A new 95% mortgage scheme for new build homes has been announced. The scheme will be a collaboration between Country Durham based intermediary The Darlington Building Society and Own New and will focus on helping new build buyers purchase with as little at 5% deposit and hopefully boost generation home ownership.

What Is The New 95% Mortgage Scheme?

According to Own News’s website, this is how they manage the high loan to value purchase with lenders:

‘With Own New, you arrange your mortgage directly with the lender in the usual way. Once accepted, you go on to own 100% of your new home. Own New works behind the scenes. For you, this is a standard mortgage directly from the lender, with competitive rates. Own New reduces a lender’s risk, enabling them to offer competitive low deposit mortgages on newly built properties. There is no cost to the homebuyer for using Own New. Your home builder pays a small fee on completion of the sale.’

Currently there are over 50 new build home developers signed up to the scheme and will initially operate in Yorkshire and the North East of the country. A safe move initially as property prices are generally lower in these areas, however they do hope that if the scheme proves to be successful, they will expand to other areas of the country.

Although all the fine details of exactly how loans will be calculated and the rates of these products, it is assumed that the borrower will still need to be able to provide their own 5% deposit from their own sources and be able to afford the 95% mortgage on the property based on their income and outgoings. Due to it being a new scheme, the risk factor of lending 95% of the property, and being quite exclusive initially, we would also expect the rates to be quite high in comparison to other mortgage products.

What Other 95% Mortgage Options Are There?

A lot of lenders still offer high loan to value mortgages, however since the covid-19 pandemic and the current economic crisis that we are experiencing, a lot of lenders have also dropped out of the 95% market. Lenders such as Nationwide offer the Nationwide 95% mortgage guarantee scheme which doesn’t use any government guarantees. The only rules are:

  1. You have to be able to afford the 95% mortgage
  2. It must be on a pre-owned home, not available on new builds
  3. You can’t be self-employed
  4. You can’t be buying a flat or apartment
  5. You must be a UK resident and 18 years or older

Speak To A High Loan To Value Mortgage Broker

If you, like many buyers are struggling to save a 10%, 15%, 20% deposit for your new home, perhaps a 95% mortgage might be right for you. Give our friendly and helpful adviser team a call today to see how we can help. Our initial mortgage consultation is free of charge and we will be able to tell you exactly how much you can borrow and what your monthly repayments will likely be. The new 95% mortgage scheme will be introduced in early 2023.

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