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What the end of the 95% mortgage guarantee scheme means for buyers
What the end of the 95% mortgage guarantee scheme means for buyers

Scotsman

time30-06-2025

  • Business
  • Scotsman

What the end of the 95% mortgage guarantee scheme means for buyers

Options for home buyers with low deposits Thousands of hopeful homeowners face fresh uncertainty as the government's low-deposit mortgage scheme came to an end today (30 June). From gorgeous Georgian town houses to jaw-dropping penthouses, converted campervans to bargain boltholes. Take a peek at the finest homes across the UK. Sign up Thank you for signing up! Did you know with a Digital Subscription to Edinburgh News, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The 95% mortgage guarantee scheme was first launched in April 2021 to boost homeownership after the pandemic. The scheme has helped more than 50,000 buyers secure a mortgage with just a 5% deposit, most of them first time buyers. But with the government yet to confirm details of a replacement scheme, questions remain about what this means for those with small deposits trying to get on the property ladder. Advertisement Hide Ad Advertisement Hide Ad Low-deposit options shrink as the scheme ends The end of the mortgage guarantee scheme comes at a challenging time for buyers, especially younger people and renters with limited savings. Some lenders may have only offered 95% loan-to-value (LTV) mortgages because the government shouldered part of the risk. The scheme worked by letting lenders purchase a government guarantee on the portion of the mortgage between 80% and 95% of the property's value. This meant that if a borrower fell into financial difficulty and the home was repossessed, the government would cover part of the lender's losses on that upper slice of the loan. Without that backing, fewer low-deposit deals might remain on the market, and those that do may come with higher interest rates and stricter affordability checks. Advertisement Hide Ad Advertisement Hide Ad According to the Moneyfacts group, borrowers who can stretch their deposit to 10% will find a much wider choice of mortgages at better rates. In April it reported that the number of mortgages available to buyers with a 10% deposit had risen to 845, compared to 442 deals for those with a 5% deposit. Are lenders stepping in to fill the gap? While the government has promised a new 'permanent' scheme to help first-time buyers, full details have not yet been confirmed. While we wait to see which lenders will continue to offer 95% mortgages without the government scheme to fall back on, there are other options to weigh up: 100% mortgages: Skipton offers a 100% mortgage for renters based on their track record of paying rent to work out what they may be able to borrow. At least two other lenders – April Mortgages and Gable mortgages – offer a 100% mortgage aimed at first-time buyers. Advertisement Hide Ad Advertisement Hide Ad Family-assisted deals: Guarantor or family deposit mortgages, where a parent or relative provides financial support, remain an option for those with small deposits. Shared ownership and first homes schemes: Government-backed alternatives like shared ownership or the First Homes initiative can reduce the size of deposit needed. New build incentives: Nationwide, along with lenders such as Accord, Barclays, Halifax and Skipton, offers 95% mortgages on new-build houses. Nationwide will also extend mortgage offers on all new builds to nine months to allow for potential construction delays. What to consider if you have a small deposit If your plan was to buy with a deposit of 5% using the scheme, there are still options available. Here's what to keep in mind: Advertisement Hide Ad Advertisement Hide Ad Check all schemes and offers: Explore shared ownership, the First Homes scheme, and family support routes such as guarantor mortgages that might help reduce your upfront costs. Shop around: Mortgage deals vary greatly. Comparing offers across the market or using a broker can help you find a deal that fits your circumstances. Just because the mortgage guarantee scheme has ended isn't to say some lenders won't still offer a 95% or even a 100% mortgage. Try to save enough for a 10% deposit: Focusing on building a bigger deposit would gain you access to 90% loan-to-value mortgage options, which most lenders offer. Budget for long-term costs: Low-deposit mortgages can be more expensive over time due to higher interest rates. Think carefully about your monthly payments and if you can afford the risk of future rate rises. Advertisement Hide Ad Advertisement Hide Ad The bottom line?The end of the 95% mortgage guarantee scheme could make it harder – but not impossible – for first-time buyers with small deposits to step onto the property ladder. While some lenders are introducing new low-deposit deals, these may come with trade-offs in the form of higher interest rates or tighter lending criteria. For buyers, the key is to explore every option, understand the long-term costs, and seek professional guidance to secure the best possible deal.

What the end of the 95% mortgage guarantee scheme means for buyers
What the end of the 95% mortgage guarantee scheme means for buyers

Scotsman

time30-06-2025

  • Business
  • Scotsman

What the end of the 95% mortgage guarantee scheme means for buyers

Options for home buyers with low deposits Thousands of hopeful homeowners face fresh uncertainty as the government's low-deposit mortgage scheme came to an end today (30 June). From gorgeous Georgian town houses to jaw-dropping penthouses, converted campervans to bargain boltholes. Take a peek at the finest homes across the UK. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The 95% mortgage guarantee scheme was first launched in April 2021 to boost homeownership after the pandemic. The scheme has helped more than 50,000 buyers secure a mortgage with just a 5% deposit, most of them first time buyers. But with the government yet to confirm details of a replacement scheme, questions remain about what this means for those with small deposits trying to get on the property ladder. Advertisement Hide Ad Advertisement Hide Ad Low-deposit options shrink as the scheme ends The end of the mortgage guarantee scheme comes at a challenging time for buyers, especially younger people and renters with limited savings. Some lenders may have only offered 95% loan-to-value (LTV) mortgages because the government shouldered part of the risk. The scheme worked by letting lenders purchase a government guarantee on the portion of the mortgage between 80% and 95% of the property's value. This meant that if a borrower fell into financial difficulty and the home was repossessed, the government would cover part of the lender's losses on that upper slice of the loan. Without that backing, fewer low-deposit deals might remain on the market, and those that do may come with higher interest rates and stricter affordability checks. Advertisement Hide Ad Advertisement Hide Ad According to the Moneyfacts group, borrowers who can stretch their deposit to 10% will find a much wider choice of mortgages at better rates. In April it reported that the number of mortgages available to buyers with a 10% deposit had risen to 845, compared to 442 deals for those with a 5% deposit. Are lenders stepping in to fill the gap? While the government has promised a new 'permanent' scheme to help first-time buyers, full details have not yet been confirmed. While we wait to see which lenders will continue to offer 95% mortgages without the government scheme to fall back on, there are other options to weigh up: 100% mortgages: Skipton offers a 100% mortgage for renters based on their track record of paying rent to work out what they may be able to borrow. At least two other lenders – April Mortgages and Gable mortgages – offer a 100% mortgage aimed at first-time buyers. Advertisement Hide Ad Advertisement Hide Ad Family-assisted deals: Guarantor or family deposit mortgages, where a parent or relative provides financial support, remain an option for those with small deposits. Shared ownership and first homes schemes: Government-backed alternatives like shared ownership or the First Homes initiative can reduce the size of deposit needed. New build incentives: Nationwide, along with lenders such as Accord, Barclays, Halifax and Skipton, offers 95% mortgages on new-build houses. Nationwide will also extend mortgage offers on all new builds to nine months to allow for potential construction delays. What to consider if you have a small deposit If your plan was to buy with a deposit of 5% using the scheme, there are still options available. Here's what to keep in mind: Advertisement Hide Ad Advertisement Hide Ad Check all schemes and offers: Explore shared ownership, the First Homes scheme, and family support routes such as guarantor mortgages that might help reduce your upfront costs. Shop around: Mortgage deals vary greatly. Comparing offers across the market or using a broker can help you find a deal that fits your circumstances. Just because the mortgage guarantee scheme has ended isn't to say some lenders won't still offer a 95% or even a 100% mortgage. Try to save enough for a 10% deposit: Focusing on building a bigger deposit would gain you access to 90% loan-to-value mortgage options, which most lenders offer. Budget for long-term costs: Low-deposit mortgages can be more expensive over time due to higher interest rates. Think carefully about your monthly payments and if you can afford the risk of future rate rises. Advertisement Hide Ad Advertisement Hide Ad The bottom line?The end of the 95% mortgage guarantee scheme could make it harder – but not impossible – for first-time buyers with small deposits to step onto the property ladder.

Warning for higher rate taxpayers with more than £14,500 saved
Warning for higher rate taxpayers with more than £14,500 saved

Daily Mail​

time28-06-2025

  • Business
  • Daily Mail​

Warning for higher rate taxpayers with more than £14,500 saved

Millions of higher rate taxpayers with more than £14,500 in savings could find themselves footing a shock tax bill. Record numbers of people have been pulled into the higher tax band, which means their tax-free savings allowance is slashed - and they will lose 40 per cent of interest above it to tax. The number of higher rate tax payers is set to balloon to more than 7million as thresholds remain frozen, figures from HMRC show. Half a million tax payers have been dragged into the 40 per cent tax bracket in the past year alone, and higher rate payers now account for almost a fifth of all tax payers. With the average easy-access account now paying 3.53 per cent, it means higher rate-taxpayers with more than around £14,500 in savings would breach their tax-free savings allowance this tax year, according to rates scrutineer Moneyfacts Compare. The personal savings allowance allows savers to earn up to £1,000 of interest tax-free. But this is only for basic rate taxpayers, higher rate tax payers see it halved to just £500 and additional rate tax payers have no tax-free allowance at all. > How the personal savings allowance and savings tax work HMRC expects to collect £6.1billion in tax on savings in the 2025/26 tax year. Of this around £1.3billion is expected to arrive from higher rate tax payers. Additional rate taxpayers, meanwhile, are expected to foot 70 per cent of the bill paid in savings tax at £4.2billion. Adam French, consumer expert at rates scrutineer Moneyfacts Compare says: 'The latest statistics from HMRC show how important it is for savers to be aware of their tax liability. 'Especially many of those who have fallen into paying the higher-rate tax of 40 per cent, whose personal savings allowance has been halved from £1,000 to £500 as a result.' How to beat the savings interest tax trap If you are keeping your savings in cash, an Isa will help you avoid a tax bill on the interest. An Isa is a tax-wrapper that allows you to salt away up to £20,000 in each tax year into savings or investments, with all returns then completely tax-free. Savers have cottoned on to this fact while interest rates have been high and the savings allowance threshold has been frozen, meaning Isas have had record amount of cash flooding into them. In April this year alone - the start of the new tax year - a record £14billion flooded into cash Isas. This was the highest figure for any month since Isas were introduced in 1999. And it does have an impact when it comes to taking the sting out of a tax bill, which can be seen in the latest HMRC figures. The nation's savings tax bill was dramatically lower last year than the Government had initially predicted. Last year HMRC forecast we would pay £10.4billion in tax on our savings in 2024-25, but this has now revised that down by a whopping £4.5billion to just shy of £6billion. Laura Suter, director of personal finance at AJ Bell said: 'This is likely down to two factors: interest rates not staying as high for as long as initially expected, and more people sheltering their savings from His Majesty's Revenue and Customs in tax-free Isas. 'We've seen record cash Isa usage in the past couple of years, as people are aware that they will be hit with tax on their savings.' Adam French added: 'Plenty of savers can avoid this tax bill by making use their yearly Isa allowances, with cash Isas keeping the savings of millions of people free from tax.' Five of the best cash Isas Products featured are independently selected by This is Money's specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. A cash Isa is an essential account for savers that protects you from tax on your interest. This means that your pot can grow without tax dragging it back - something that is especially important for the growing number of 40 per cent taxpayers. This is Money's savings experts scour the market for the real best cash Isa deals - looking for top rates and accounts that come without catches to trip you up. Below you can find a run down of our top deals and you can check all the best cash Isa rates in our savings tables. CMC Invest* easy-access - 5.44% (0.85% bonus for 3 months) - Facts: £1 to open, no limit on withdrawals, short bonus - Transfers in: Yes - Flexible: Yes Trading 212* - easy access - 4.92% with this link - Facts: £1 to open, no limit on withdrawals, 0.73% bonus for 12 months - Transfers in: Yes (but won't get bonus rate) - Flexible: Yes Chip easy access* - 5.00% (0.94% bonus rate for 3 months) - Facts: £1 to open, limited to three withdrawals a year, short bonus - Transfers in: Yes - Flexible: No Cynergy Bank one-year fix - 4.35% - Facts: £1,000 to open - Transfers in: Yes - Flexible: No Cynergy Bank two-year fix - 4.25% - Facts: £1,000 to open - Transfers in: Yes - Flexible: No

Record number of buy-to-let mortgage deals as average two-year rates drop below 5% for first time since 2022
Record number of buy-to-let mortgage deals as average two-year rates drop below 5% for first time since 2022

Daily Mail​

time24-06-2025

  • Business
  • Daily Mail​

Record number of buy-to-let mortgage deals as average two-year rates drop below 5% for first time since 2022

Landlords are being spoilt for choice with the number of buy-to-let mortgages rising to a record high, according to new figures. The total number of buy-to-let deals across the market has reached 4,144, according to rates scrutineer, Moneyfacts. This is the highest count on record since it began tracking buy-to-let deals in November 2011. The number of buy-to-let deals has almost doubled since June 2023 and there has been a 42 per cent increase since this time last year, when there were 2,935 deals available. With competition between lenders on an upward trajectory, mortgage rates have also fallen over the past year. Moneyfacts says the average two-year fixed rate buy-to-let deal has dropped below 5 per cent for the first time since September 2022. Investors looking to buy or remortgage with a 25 per cent deposit or equity stake can now get an average two-year fix at 4.96 per cent compared to 5.59 per cent this time last year. On a £200,000 interest only mortgage, that's the difference between paying £826 a month and £932 a month. Those with a 40 per cent deposit or equity stake can secure 4.46 per cent on average, according to Moneyfacts, down from 5.25 per cent this time last year. On a £200,000 interest only mortgage, that's the difference between paying £743 a month and £875. It's a similar story for those looking to fix for five years, albeit not quite as extreme. The average five-year fix for those buying or remortgaging with a 40 per cent deposit or equity stake is now 4.51 per cent, down from 4.93 per cent a year ago. Rachel Springall, finance expert at Moneyfacts thinks landlords should benefit from the rise in available deals. 'Both the two- and five-year fixed rates have fallen for the fourth consecutive month,' says Springall. 'The average five-year fixed buy-to-let rate is now at its lowest level in over six months, but year-on-year the rate has not dropped as viciously as its two-year counterpart. 'Lenders monitor swap rates to gauge future rate expectations, and when they drop it encourages mortgage rate cuts. 'Lower buy-to-let rates might create a positive sentiment for new and existing landlords, however, there will be immense pressure on some to turn around a profit in the future.' What are the best rates? Many of the lowest buy-to-let mortgage rates come with staggeringly high fees. These can be as high as 10 per cent of the total mortgage amount in some cases. On a £200,000 mortgage that would equate to £20,000. This means it's essential for landlords to look at the overall cost of the mortgage and factor in both the fees and the interest rate. While buy-to-let rates have improved on average compared to last year, many investors will find they can now secure rates below 4.5 per cent and do so without incurring massive product fees. For example, a landlord remortgaging to a five-year fix with at least 40 per cent equity in the property can get 4.28 per cent with NatWest, with a £59 fee or 4.29 per cent with HSBC with no fee. A £200,000 mortgage fixed at 4.29 per cent on an interest only basis would cost £716 a month. The best two-year fixed rates are slightly more expensive, but only marginally. A slight quirk in the market is that there is little difference at present between the best rates for those buying with or remortgaging with 25 per cent deposits or equity and those doing so with 40 per cent. For example, HSBC is offering those remortgaging at 75 per cent loan-to-value the chance to fix for five years at 3.94 per cent, albeit with a £3,999 fee attached. The lender is also offering a £1,999 fee option with a rate of 4.19 per cent. How to find a new mortgage Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible. Buy-to-let landlords should also act as soon as they can. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you What if I need to remortgage? Borrowers should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it. Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees. Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. What if I am buying a home? Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power. What about buy-to-let landlords Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. How to compare mortgage costs The best way to compare mortgage costs and find the right deal for you is to speak to a broker. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice. Interested in seeing today's best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs. If you're ready to find your next mortgage, why not use L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money and L&C Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you.

Savers issued warning after Bank of England holds base rate
Savers issued warning after Bank of England holds base rate

The Independent

time19-06-2025

  • Business
  • The Independent

Savers issued warning after Bank of England holds base rate

Savers are being urged to proactively review their accounts and avoid the trap of low returns, after the Bank of England held its base rate steady at 4.25 per cent on Thursday. Despite the general downward trend in average savings rates in recent weeks, Thursday did offer a ray of light for some, with certain providers unveiling new products. Rachel Springall, a finance expert at emphasised the critical need for savers to take action. She stated: "Loyalty does not pay so it comes down to savers to proactively review rates and switch their account if they are getting a poor return on their hard-earned cash." 'It is vital that savers look beyond the high street banks and instead take notice of the many challenger banks and mutuals competing in the savings arena. 'The biggest high street banks pay an average of 1.56% across easy access accounts, but even this pitiful return is being eaten away by inflation, which sits above its 2% target. 'It may be convenient to leave pots with such prominent brands, but it's costing savings in better returns available elsewhere.' According to Moneyfacts, the average easy access savings rate on offer across the market fell from 2.79% at the start of May to 2.72% at the start of June, based on someone having a £10,000 deposit. The average easy access Isa rate fell from 3.03% to 2.98% over the period. Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners said: 'With interest rates still offering savers a decent return, it's never been more important to keep an eye on the personal savings allowance (PSA) – a threshold that's remained the same since 2016. 'Under the PSA, basic rate taxpayers can receive up to £1,000 of interest tax-free, while for higher rate taxpayers this is limited to just £500. Additional rate taxpayers get no PSA at all. 'Higher-rate taxpayers are particularly at risk of breaching the PSA, especially if they've secured one of the market's top-paying accounts. 'To sidestep an unexpected tax bill, savers should consider a more tax-efficient approach. Making full use of the £20,000 Isa allowance and boosting pension contributions can help shelter returns from the taxman, while also supporting long-term wealth goals.' On Thursday, Yorkshire Building Society announced it had refreshed its range of fixed-rate saving options, including a one-year fixed-rate bond at 4.00% AER (annual equivalent rate), a 4.05% two-year fixed-rate bond, a 3.80% three-year fixed-rate bond, and a 3.70% five-year fixed-rate bond. It is also offering a 3.75% one-year fixed-rate cash Isa and a 3.80% three-year fixed-rate cash Isa. Harry Walker, senior savings manager at Yorkshire Building Society, said: 'With interest rate movements making it harder for savers to plan ahead, we're proud to offer fixed-rate options that combine strong returns with peace of mind.' Another mutual, Skipton Building Society, has launched a 'bonus saver' easy access account, at 4.50%, which includes a 1.70% fixed bonus for the first 12 months. The launch follows the introduction of Skipton's new cash Isa base rate tracker last week. The tracker is linked to the Bank of England base rate, currently offering savers a rate of 4.10%. The rate of interest is guaranteed to track 0.15 percentage points below the Bank of England base rate for 12 months from the first payment into the account. The base rate hold on Thursday may disappoint some mortgage holders looking to switch to a new deal. According to figures from UK Finance, around 1.6 million fixed-rate homeowner mortgage deals will end or have already ended in 2025. The Bank of England has said interest rates 'remain on a gradual downward path,' despite being left on hold on Thursday. Nicholas Mendes, mortgage technical manager at John Charcol, said: 'Markets still expect a cut or two later this year, possibly as soon as August,' although: 'The rate path is still anything but settled. 'Borrowers would be wise not to wait passively. If your current fixed deal is due to end this year, it's worth reviewing your options early, as some lenders allow new deals to be secured up to six months in advance.' Mark Harris, chief executive of mortgage broker SPF Private Clients, said borrowers do have 'some good news … in that lenders have reduced mortgage rates and eased criteria in recent weeks. 'This rate hold was largely expected by the markets but if swap rates (which are used by lenders to price mortgages) fall, this will enable lenders to price their fixed-rate mortgages more keenly, easing borrowers' affordability concerns.' Matt Smith, Rightmove's mortgages expert said: 'Lenders have a bit of room to reduce rates further even with a hold in the (Bank of England base rate) today so home movers can still be hopeful of some small mortgage rate cuts over the next couple of weeks. 'Average rates have been pretty flat in recent weeks, but we have seen increasing signs of competition amongst lenders as they have reduced their stress-testing criteria and with new mortgage products coming back to market, lenders are looking at ways to support more people get the home that they want.' Jenny Ross, Which? Money editor, said: 'Anyone concerned about meeting their payments should speak to their lender as soon as possible – they're obliged to help.'

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