Government Backed 95% Mortgages Go Live

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Government backed 95% mortgages as promised by Rishi Sunak at the recent budget go live this week. A number of high street lenders have all signed up to the scheme with the number of products and lenders set to increase in the coming days and weeks. 

Scheme eligibility 

The scheme is available for property purchases in England, Wales, Scotland, and Northern Ireland and there are several key government criteria which every application will need to meet

  • The maximum property price/value is £600,000 (although some lenders have capped this figure at a slightly lower value).

  • The property must be the only residential property owned by the applicant and must be owner-occupied.  Applicants with another residential property, whether let or used as a second home or for family occupation, do not qualify.

  • The mortgage must be on capital and interest.

Along with the government scheme eligibility, individual lenders will also have some of their own criteria which will need to be met. 

For more information on the new government backed scheme and for whole of market mortgage advice, contact one of the team on 020 8315 6960.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Jargon Buster

When you are applying for a mortgage it can be hard to understand all the terminology and abbreviations. Here is a guide to some of the more common words you will come across.

Provided to you by a lender, confirming ‘in principle’ what they will allow you to borrow. This can be provided to agents and sellers to show that you can afford their property.

APR means the Annual Percentage Rate and APRC is the Annual Percentage Rate of Charge. These are both used to compare the overall cost of a mortgage. APR compares the cost of the mortgage for the initial fixed period (for example, the first two or five years) whereas the APRC is the overall cost of the mortgage should you pay it for the full term of the mortgage period (for example, 25 year term). A broker would use these to recommend the best mortgage, based on the initial term and the overall term and make their recommendation based on this information.  

Automated Valuation Model, also known as a desktop valuation. The lender instructs their preferred surveyors to confirm the value of the property without the need to physically go to the property. Surveyors will base their valuation on recent sales and other recent valuations. You will not receive a copy of the valuation if an AVM is carried out. 

Lenders will often charge an arrangement fee to set up your mortgage. You can choose to pay this up front or add the arrangement fee to the mortgage. If you choose to add the fee you will pay interest on the fee over the term of the mortgage. Your broker will compare products with and without fees and recommend the best deal for you. 

If you do not pay your mortgage on the date that has been agreed each month, you will fall into mortgage arrears. Should you not be able to pay your mortgage for any reason, contact the lender immediately to discuss your circumstances. 

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