Low-deposit mortgages are more expensive and in short supply as lenders pull back after the Covid lockdown
Fuelled by the Stamp Duty holiday, UK house prices and mortgage approvals have bounced back strongly after the lockdown. However, low-deposit mortgages are in short supply and more expensive than they were prior to the lockdown.
Some lenders like HSBC have restricted sales of 90% mortgages and others like Nationwide have increased interest rates as well as requiring borrowers to prove that at least 75% of the deposits have come from their own savings. Virgin Money has re-entered the market but their offering is not available for those buying flats, maisonettes or new-builds. Buyers must also fix the interest rate for 7 or 10 years with an early repayment charge as high as 7%.
As a result, first-time buyers are at an unprecedented disadvantage in the current housing market compared to just six months ago. The higher interest rates also make it less likely that the monthly mortgage payment will be affordable, the requirement to fund deposits from savings prevent the Bank of Mum and Dad from helping out, and long fixed-rate periods with early repayment charges are less than ideal for first-time buyers who often need to buy a bigger house in 4-5 years.
OnStep Homes offers a solution for such first-time buyers who are locked out of getting a 90-95% mortgage by enabling them to step onto the housing ladder with a secure 7-year tenancy and an investment of as little as 5% in a home that they choose and can gradually increase ownership in as and when they are able to.
If you’re interested in getting onto the housing ladder through OnStep Homes, please use our calculator to estimate the value of the home you can afford. When you are ready, you can apply online to get an Agreement in Principle.