Saturday, August 13, 2022

Halifax unveils 95% mortgage for new build houses


From July 1 Halifax will increase the maximum loan to value on new houses from 90 to 95 per cent, and extend its availability to include houses built by smaller developers

The UK’s biggest lender has unveiled a 95 per cent mortgage which can be used to buy a new build house.

With only months to go until the Government’s Help to Buy scheme — which has given more than 350,000 households a leg up onto the property ladder with a five per cent deposit — is wound up, lenders are looking for alternative ways to help buyers with small deposits on to the housing ladder.

From July 1 Halifax will increase the maximum loan to value on new houses from 90 to 95 per cent, and extend its availability to include houses built by smaller developers.

Shared ownership properties will also be eligible. This means that buyers will need a five, rather than a ten per cent deposit.

We recognise that getting a deposit together is still the biggest hurdle faced by most first-time buyers, said Andrew Asaam, mortgage director, at Halifax.

This also underlines our confidence in the new build market and our support for the UK construction industry. Supporting new build homes supports the drive to net zero by making warmer, greener homes more accessible and attainable for potentially thousands of new buyers, he said.

For Londoners, however, the move is of limited appeal right now because the price cap for the new deal has been set at £570,000 ($691,760.55). And the scheme only applies to houses, not flats.

According to Rightmove there are less than a dozen newly built houses available within that price bracket in the capital.

It will be more relevant to those considering moving out and commuting.

Despite this major shortcoming Ray Boulger senior technical director at John Charcol, still feels the news is ‘important and significant’.

Traditionally lenders have required a bigger deposit for new build homes because normally they expect prices to drop once, like with a new car, they are driven off the forecourt, he explained.

An important question here is: “Why now?” and I think that is down to the Government’s green agenda. Lenders are required to have a certain percentage of properties with an Energy Performance Certificate (EPC) rating of C or above by 2027 and most new build homes are above an EPC C.

Halifax will offer a maximum of 4.49 per cent times a buyers’ income. So, to buy a £400,000 ($485,446.00) property with a five per cent deposit, a buyer would need to earn almost £85,000 ($103,157.27).

Boulger said that after the end of Help to Buy, which offers Government equity loans of up to 40 per cent, the only option for low to medium earners without a big deposit will be shared ownership, or one of the growing number of privately-financed shared equity schemes which are being developed.


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