Yorkshire Building Society 99% Loan-to-Value Mortgage Is Here, Is a Low Deposit Loan a Smart Choice?

Yorkshire Building Society 99% Loan-to-Value Mortgage. [Credit: Lancs Live]

Yorkshire Building Society 99% Loan-to-Value Mortgage: First-time buyers can now access up to 99% loan-to-value (LTV) with a new mortgage.

Even though home loan prices have dropped recently, many buyers are scared off by the high cost of homeownership. Mortgage rates hit decade highs last year.

The government was rumored to be working on a state-backed 1% mortgage deposit scheme, but it did not materialize.

Using a £5k deposit, it can provide a 99% loan to value on homes worth up to £500,000.

Craig Fish, director at Lodestone Mortgages & Protection, says the bunny is out of the hat just in time for Easter.

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Yorkshire Building Society 99% Loan-to-Value Mortgage Is Here

The UK property market is currently facing a chicken and egg problem because first-time buyers are the ones who stimulate the movement further up the property ladder.”

“It’s helping those who need it the most to get on the property ladder, and subsequently allowing those already on the ladder to move further up it.”

Yorkshire Building Society offers a five-year fixed rate mortgage at 5.99% for a £5,000 deposit, providing a 97% LTV mortgage on a £235,020 home.

Repayments for the deal would be £1,481 per month over 25 years. The deal has restrictions, such as a maximum property value of £500,000, and is not available in Northern Ireland.

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For a joint mortgage, one applicant must be a first-time buyer, and both applicants must be 70 years of age or younger.

Is a Low Deposit Loan a Smart Choice? What You Need To Know?

With a 100% LTV Track Record mortgage, Skipton Building Society is helping struggling first-time buyers. If the borrower has a small deposit, this product can be a viable option, but you have to consider the costs too. If you max out your mortgage, you’d have to pay £3,186 a month.

For example, HSBC currently offers a five-year fixed rate for 90% LTV at 4.62%, which would be £373 cheaper at £2,813 if the borrower paid a larger deposit.

There’s a higher chance of getting into negative equity if you borrow a lot with a small deposit. It’s predicted that house prices will drop by 4% this year, so a 1% deposit loan might not leave much room for error.

The risk of negative equity increases as the level of borrowing increases, according to Mark Harris, CEO of SPF Private Clients. The value of the property should increase over time because there are only five-year products available. Critics may wonder what will happen if a buyer loses their job and cannot afford their mortgage payments, but the same applies to renters as well.

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