Help to Buy initial second phase mortgages launched

Halifax/Bank of Scotland and NatWest/Royal Bank of Scotland have announced details of the new Help to Buy mortgages they'll be offering from this week.

Four banks have unveiled details of the mortgages they will be offering as part of the initial second phase of the Government’s Help to Buy scheme across the UK.

This second strand allows borrowers with a minimum 5% deposit to borrow the remaining value of a home up to £600,000. It has to be their main residential home and cannot be bought and then let out.

The Government will act as a guarantor on these mortgages, although it is charging lenders a fee for this ‘insurance’. It has a fund of £12 billion set aside to cover this over the next two years.  

The scheme was brought forward by the Government from its original launch date in January, although it won’t be guaranteeing the mortgages until January.

Let's take a look at these new mortgage deals.

Halifax and Bank of Scotland

Halifax and Bank of Scotland are launching mortgages aimed at both first-time buyers and homemovers who want to borrow either 90% or 95% of a home’s value.

They will include a two-year fixed rate at 5.19% with a £995 product fee. More details of other mortgages are promised in the next few days.

The banks will be accepting applications from this Friday (11th October).

NatWest and Royal Bank of Scotland

These two banks will be offering a couple of 95% mortgages under the guarantee scheme. And 740 of their branches will be open later over the next two weeks to help meet the expected demand.

There will be a two-year fixed rate mortgage at 4.99% and a five-year fixed rate deal at 5.49%. There are no fees on the mortgages – a potentially canny marketing move by NatWest and RBS.

These mortgages are available from today (8th October).

Other banks taking part

Aldermore, Virgin Money and HSBC have confirmed that they will taking part in the second phase, with Aldermore and HSBC hoping to launch deals this year and Virgin Money entering the market from January.

How do these mortgages compare?

There are other mortgages out there for people with a 5-10% deposit that aren’t part of the Help to Buy scheme. Here’s how some of the best buys compare to what’s been announced.

*Not available until 11th October

So the new Help to Buy mortgages compare pretty favourably with what's out there already, particularly if you need to borrow 95%.

Is it worth waiting?

It's very likely that more lenders will sign up to the second phase of Help to Buy over the coming weeks. And lenders who won't be taking part will also probably re-price their mortgages to compete.

However, if you're thinking of waiting to see if cheaper mortgages come onto the market, bear in mind that the price of the home(s) you're interested in may increase in the meantime.

See the latest mortgage rates and get expert advice

This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker (such as one of our brokers here at Lovemoney), before acting on anything contained in this article.

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

More on buying property:

Seven reasons mortgage lenders turn you down

How to beat Stamp Duty

The questions you must ask before you buy a house

Dealing with estate agents

When should you stop renting and buy?