Aldermore announces Help to Buy rates
Aldermore has become the first lender to make the Help to Buy mortgage guarantee available on remortgages and not just new purchases.
It has launched a 5.28% two-year fixed rate at up to 95% loan to value (LTV) and a 4.98% two-year fix at 90% LTV. There is a £999 fee for both.
The bank, one of Britain's newest at just four years old, has also increased the LTV available from 80 to 85% on some of its other mortgages outside the Help to Buy mortgage guarantee scheme.
David Hollingworth, head of communications at mortgage broker London & Country, said: "Although the Aldermore 95% rate is not making any new ground in leading the market in terms of rate, it is opening its Help to Buy deal up to those looking to remortgage.
"Until now all participants have focused their guarantee-backed deals on the purchase market only. This will open up an alternative option for anyone that is stuck with their existing lender but would like the opportunity to move onto a fixed rate."
However, he adds that those purchasing can find more attractive rates outside of Help to Buy.
"HSBC offers a Help to Buy-backed deal at 4.79% with a £99 fee,' he added.
So how do the Aldermore rates compare with the Help to Buy mortgage guarantee deals available from other lenders?
The Aldermore two-year fix at 95% LTV is more expensive than the HSBC, RBS/Natwest and Halifax equivalents available to home movers.
HSBC has a two fixed-rate mortgage up to 95% LTV at 4.79% with a booking fee of £99. The RBS/NatWest two-year fix at 95% LTV has a rate of 4.99% and doesn't come with a fee.
The Halifax's two-year fix at 95% LTV has a rate of 5.19% and has a fee of £995.
Santander, Barclays, Virgin Money and OneSavings Bank will also join the scheme but have yet to say when they will start taking applications or announce interest rates and fees.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
Loan to value
The LTV shows how much of a property is being financed and is also a way to tell how much equity you have in a property. The higher the LTV ratio the greater the risk for the lender, so borrowers with small deposits or not much equity in the property will be charged higher interest rates than borrowers with large deposits. The LTV ratio is calculated by dividing the loan value by the property value and then multiplying by 100. For example, a £140,000 loan on a £200,000 property is a LTV of 70%.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.