The mortgage lender’s new 10% deals will not be available to existing homeowners, unless a joint mortgage application involves a first-time buyer
The UK’s top nationwide mortgage lender is reintroducing 10% deposit mortgage deals, in a sign of increasing confidence in the property market.
The mortgages will be available for first-time buyers from the group’s Lloyds Bank and Halifax brands directly, and via Halifax intermediaries, from 8 December. The maximum loan amount will be £500,000 and the maximum loan-to-income ratio will be capped at a multiple of 4.49. New-build properties will be excluded.
In line with many other lenders, Lloyds pulled its 10% deposit deals around the start of the coronavirus crisis and it has since been offering only 15% deposit deals, meaning buyers have had to find substantially bigger sums to get on the housing ladder.
Lenders increased the required deposits over concerns house prices could fall in the wake of the pandemic, leaving some borrowers in negative equity. The threat of rising unemployment in the economic crisis has also heightened worries about borrowers defaulting on their loans.
Lloyds’ new 10% deals will not be available to existing homeowners, unless a second applicant in a joint mortgage application is a first-time buyer.
Applicants for the deal will need a higher credit score than for higher-deposit mortgages, and the deals will not be available alongside other “lend a hand” schemes such as Help to Buy.
Jasjyot Singh, the managing director of consumer and business banking at Lloyds Banking Group, said: We are committed to helping people take their first step on to the property ladder and while there have been record levels of mortgage approvals over the past few months, raising a deposit is still hands down the biggest challenge for first-time buyers. Higher LTVs (loans to value) means we can support more people ready to get a foot on the ladder.
The bank has also relaunched a mortgage scheme that enables first-time buyers to borrow up to 100% of the mortgage if their family backs the repayments.
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