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Banks unveil new 5% deposit mortgage ranges under Government-backed scheme

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Vicky Shaw, PA Personal Finance Correspondent
·4-min read
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Major banks have unleashed a wave of new 5% deposit mortgages onto the market, as part of a new Government-backed scheme to help first-time buyers and home movers.

Here is a round-up of what some banks have said so far:

– Barclays 

Barclays has two new products under the scheme. It is offering a two-year fixed-rate fee-free deal on loans of between £25,000 and £570,000, with a rate of 3.99%.

It is also offering a higher rate of 4.09% for borrowers who want to fix their mortgage for a longer period of five years.

The products are available to self-employed applicants, who can be first-time buyers or existing home owners, and they can be applied for through a broker or direct with Barclays.

The products are unavailable on new-build properties.

A Barclays statement said: “We are looking forward to supporting customers in their next steps as home owners.”

– HSBC UK

HSBC UK has unveiled four new products under the scheme, some with a fee and some without. The deals are available to both first-time buyers and existing home owners.

They are a two-year fixed-rate deal at 3.99% with a £999 fee, or one for the same period without this fee for a higher rate of 4.29%.

Five-year fixed-rate deals are available at 4.29% with a £999 fee, and 4.49% without this fee.

HSBC said its maximum loan size available through brokers is £500,000. For direct customers it is £400,000, but it will be increasing this to £500,000 at a later date.

To qualify, the home must be the only property that mortgage applicants own and it will be their main residence. The property must not be a new-build or part of a shared ownership or shared equity scheme.

Michelle Andrews, HSBC UK’s head of buying a home, said: “After such a turbulent year it is great that this scheme will make a real difference in enabling first-time buyers who didn’t think they would have a chance of getting a mortgage and home movers to get the keys to their new home.”

– NatWest 

NatWest is offering a two-year fixed-rate mortgage at 3.90% with no product fee.

It is also offering a five-year fixed rate at 4.04% with no fee.

NatWest said its deals are available to both first-time buyers and existing home owners. NatWest’s lending criteria will include both employed and self-employed customers.

Properties classed as new-builds are excluded and the home must be valued at no more than £600,000.

The scheme has launched initially through NatWest’s direct mortgage channel, with intermediary channels to follow.

Miguel Sard, MD of home buying and ownership at NatWest said saving up for a big deposit can often be difficult for younger people and first-time buyers, adding: “And we know people in these groups are some of the hardest hit by the effects of the pandemic. A Government-backed scheme will help segments of the market for whom home ownership has felt far out of reach in recent months.”

– Santander

Santander will offer three deals with no product fee and a free valuation from Tuesday.

The three products, which are repayment mortgages for houses priced up to £600,000 or flats and leasehold properties up to £400,000, will be available to first-time buyers and home movers.

The mortgages will be a two-year tracker rate at 3.99%, a three-year fixed-rate at 3.99% and a five-year fixed-rate at 4.09%.

The products available under the scheme cannot be used on new-build homes.

Customers can apply directly with Santander or via a broker.

Brad Fordham, head of mortgages at Santander said: “We know that buying a home is expensive and finding the money for a deposit and the up-front costs can sometimes prove a barrier to potential home owners.”

– Lloyds Banking Group

The group’s brands Halifax (including Halifax Intermediaries), Lloyds Bank and Bank of Scotland are supporting the scheme.

They have launched a two-year fixed-rate deal at 3.73% with £999 fee or with a rate of 4.00% for no product fee.

A five-year fixed-rate deal is also available at 4.00% with a £999 fee or at 4.20% with no product fee.

All products are available for loans of up to £500,000 over a maximum 40-year term to purchase existing properties. Products not available to purchase are new-build, shared equity, shared ownership, or Right to Buy property.

Andrew Asaam, mortgages director at the Lloyds Banking Group, said: “The mortgage guarantee scheme will be a gamechanger for those trying to raise a deposit while often paying rent at the same time.

“We support steps to help make home ownership a reality for more people and are offering 95% mortgages through the scheme to both first-time buyers and home movers. We have also committed to lending £10 billion in 2021 to help people buy their first home this year.”