Skipton launches 95% mortgage

house on see-saw

First-time buyers have been given a glimmer of hope after Skipton launched a 95% loan to value mortgage. This means buyers only have to stump up a deposit worth 5% of the property's price.

Loans worth up to 100% of a property's value were commonplace up until 2008 but were quickly scrapped once the financial crisis hit and mortgage lenders were forced to tighten their belts.

The Skipton product, launched through Connells brokers, is the only 95% mortgage available where parental help is not required.

Currently, National Counties Building Society offers a two-year fixed rate at 95% LTV with a rate of 4.99%. However, this requires the buyer's parents to act as guarantor. Without them the maximum LTV will be 75%. The product fee is £495.

Alternatively, the Lend a Hand mortgage from Lloyds TSB is also 95%. It has a rate of 5.09% but the buyer will need a 5% deposit along with a 'helper' who is prepared to offer another 20% of the property value (to be held in a special Lend a Hand savings account and on which they will earn 3.80% interest) as additional security.

But for those first-time buyers without the option of using parents' help the Skipton mortgage offers a lifeline. It has a rate of 6.49% fixed for two years and an application fee of £195.

Ray Boulger, senior technical manager at John Charcol, says: "This is encouraging for the market and I do think there's a chance a small number of lenders will follow suit over the next few months."

Your Comments

4.99 is a good rate. I would stand guarantor for 2 years no problem. To be guarantor means that if the borrower doesn't make a payment, the guarantor has to pay it.