1% Deposit Mortgages

[]
1 Step 1

By submitting this information you agree to the Contact Terms available here

keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right
FormCraft - WordPress form builder

01/03/2024 – News outlets are reporting that the government has scrapped the idea of a 1% deposit mortgage scheme. No confirmation of this yet from Jeremy Hunt

SPRING BUDGET 6th MARCH

Here at Moor Mortgages and The Mortgage Uni I aim to keep my clients informed. Here is what we know about the potential 99% mortgage scheme so far:

The 1% Deposit Mortgage Scheme:

Overview:

The 1% Deposit Mortgage Plan: What We Know

The UK government is thinking about making a big change for people who want to buy their first home. They want to introduce a plan where you only need to save 1% of a house’s price as your first deposit.

Right now, if you’re buying a house for the first time, you might need to save 5% of the price to start. But with this new plan, you would only need to save 1%, which makes it much easier and quicker to start buying your own home.

When Could This Happen?
The government is thinking about this 1% deposit idea as part of their plans to help more people buy homes. It might be announced soon, and it’s all about making it easier for younger people or anyone buying a home for the first time.

Who Would This Help?
This plan is mainly for people who want to buy their first home but find it hard to save a lot of money for a deposit. It’s especially aimed at helping younger people or families who want to own their home but can’t because saving up is tough with how expensive things are.

Conclusion
This new 1% deposit plan is a big change for buying homes in the UK. It could make it a lot easier for first-time buyers to get their homes, but it also brings up some important questions about housing in the future. We’ll keep watching to see how this plan develops.

If you would like to be kept up-to-date when/if this scheme launches just fill in your details below and I’ll be in touch —————————————————–v

[]
1 Step 1
keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right
FormCraft - WordPress form builder

Table of Contents

In More Detail…

What We Know So Far

The UK government is thinking about making a big change for people who want to buy their first home. They are reportedly going to introduce a plan where you only need to save 1% of a house’s price as your first deposit.

Right now, if you’re buying a house for the first time, you might need to save 5% of the price to start. But with this new plan, you would only need to save 1%, which makes it much easier and quicker to start buying your own home.

Currently, under the mortgage guarantee scheme, first-time buyers can obtain a mortgage with a 5% deposit. However, the new proposal would allow them to secure a mortgage with just a 1% deposit, dramatically reducing the upfront cost of purchasing a home.

For example, under the new scheme, a buyer looking to purchase a property at the average UK house price of £288,000 would only need to provide a deposit of £2,880. This contrasts sharply with the current 5% deposit requirement, which would need a deposit of £14,400 for the same home.

When Is It Likely to Happen?

The government’s consideration of the 1% deposit mortgage scheme aligns with Chancellor Jeremy Hunt’s broader economic plans and is expected to be a key feature in the upcoming budget announcement on 6 March 2024.

The initiative is part of the government’s effort to make homeownership more accessible, particularly for younger generations who have struggled to accumulate sufficient savings for larger deposits.

Who Could Benefit?

The main beneficiaries of the 1% deposit mortgage scheme are potential first-time homebuyers, especially younger individuals and families who have found it challenging to save for a substantial deposit amidst rising living costs and property prices. By lowering the deposit requirement, the scheme aims to make homeownership a more achievable goal for ‘generation rent’.

Potential Risks and Criticisms

Despite the potential benefits, the 1% deposit mortgage scheme has faced criticism from various experts. Critics argue that while the scheme might provide a short-term boost to homeownership rates, it fails to address the underlying issue of housing supply shortages in the UK. There is a concern that the increased demand generated by the scheme could drive up house prices, exacerbating affordability issues in the long run.

Labour’s Deputy Leader Angela Rayner has criticised the government for not addressing the supply of affordable homes and for failing to reform the planning system, which has contributed to the housing crisis. Additionally, some financial experts, including Money Saving Expert Martin Lewis, have warned that lower deposit mortgages often come with higher interest rates, resulting in more expensive mortgage repayments over time.

Conclusion

The 1% deposit mortgage scheme represents a significant shift in the UK’s approach to homeownership and mortgage lending. While it offers a potentially transformative opportunity for first-time buyers, it also raises important questions about the long-term implications for the housing market and overall affordability.

As the government finalises its plans, the impact of this scheme on both individual homebuyers and the broader housing market will be closely monitored.

Ministers’ 99% mortgage idea

“This radical approach to dismantling the towering barriers to home ownership will sound fantastic to those struggling to find a larger deposit,” said Peter Stamford, the founder and lead adviser for Moor Mortgages, commenting on the speculation about 99% loan-to-value (LTV) mortgages, first reported in the Independent.

Govt considers ‘radical approach’ to homeownership with 1% deposit mortgages

Peter Stamford at The Mortgage Uni said the “sting in the tail” would be the higher interest rates that come with low deposits.

Govt considers ‘radical approach’ to homeownership with 1% deposit mortgages

The UK government is exploring a “radical approach to dismantling the towering barriers to homeownership” by offering 1 per cent mortgages, according to The Mortgage Uni mortgage expert, Peter Stamford The UK government is considering introducing 1 per cent deposit mortgages as part of its new housing strategy, to help young people and first-time buyers purchase their homes. The initiative is designed to remove the barrier of a large deposit and could be announced in the Spring Budget. Stamford described this idea as “fantastic” for those struggling to find a larger deposit

1% deposit mortgages: a good option for first-time buyers?

Mortgage brokers have warned that the "high-stakes gamble" could fuel a house price bubble that made home ownership even more unaffordable for future would-be buyers. Peter Stamford, the founder of Moor Mortgages, told The Intermediary that the initiative could "cause the property market to overheat, driving prices up further".

Let’s dive into the process you’ll go through, step by step.

First things first, connect with a friendly mortgage broker who will help you figure out how much you can potentially borrow and which type of mortgage suits you best. They’ll make a mortgage recommendation and, if you’re happy to move forward, they’ll secure your Decision in Principle (DIP). The DIP is like a promise from the lender that they’ll grant you a mortgage for the specified amount, based on the information you’ve provided.

With a clear understanding of your budget, you can start your exciting property search. Explore listings from different estate agents as they often have different options available. Don’t hesitate to ask questions about the local areas and the condition of the properties you’re interested in.

When you finally find your dream home, it’s time to make an offer! The great news is that with your DIP secured, you’re in an excellent position to make a solid offer on the property. Once your offer is accepted, it’s time to move forward with your application.

Your mortgage adviser will guide you through the full mortgage application process. This is when the lender will also arrange for a mortgage valuation to ensure everything is in order

The solicitors or conveyancers will handle the legal side of things.
They will draw up contracts for the purchase and carefully check all the details to ensure accuracy. They’ll look out for any tricky clauses in the title deeds and examine leases for potential future issues.

Exciting times ahead!
Your solicitor and the seller’s solicitor will exchange contracts. At this stage, you haven’t made the full payment yet, but you have legally agreed to buy the property on a specific date. This is also when you hand over your deposit money and must have buildings insurance

The big day has arrived! Completion takes place once you’ve exchanged contracts and paid for your new home in full. The money is transferred to the seller’s solicitor, and finally, the keys are released to you. It’s time to celebrate and step into your new home!

Congratulations on taking the exciting step of buying your home with Moor Mortgages! We want to ensure that you have a relaxing and stress-free experience, so it’s important to be aware of some additional costs involved in the process. Don’t worry, we’ll break it down for you in a friendly and easy-to-understand way

If you’re a first-time buyer, you’ll only need to pay Stamp Duty if the property you’re purchasing is worth over £425,000. But even then, there’s good news – you’ll still receive some relief, unless the property is valued over £625,000. If you are moving house Stamp Duty bands are currently:

Nothing on the first £250,000
5% between £250,001-£925,000
10% between £925,001 and £1.5 million
12% above £1.5 million

Before your mortgage lender approves your loan, they’ll need to confirm the value of the property. As part of the process, they’ll arrange a valuation for lending purposes. The great news is that some lenders may not charge you for this, depending on the type of mortgage product you choose.

In addition to the valuation, you might also consider getting a survey. There are two types: a homebuyer report and a full structural survey. A homebuyer report includes a valuation and provides a detailed report on the state of the property, highlighting any necessary work. On the other hand, a full structural survey is more comprehensive and is recommended if you’re planning extensive renovations, or if the property is older or of unusual construction. We’ll help you understand which option is best for you.

Buying a house involves navigating through a maze of laws and legal requirements. That’s why having a reliable conveyancer or solicitor is essential. They’ll guide you through contracts and ensure everything is in order. Their role also includes liaising with the seller’s solicitor to keep the purchase on track. Conveyancing fees can vary, so it’s worth getting quotes from different providers.

At Moor Mortgages, we offer more than just mortgage advice. We’re here to make your home buying experience enjoyable and hassle-free. Your dedicated advisor will assist you throughout the entire application process, finding the best rates and ensuring everything is handled smoothly. We charge £199 fixed fee, payable only if you choose to apply for a Mortgage. Can’t say fairer than that.

When it’s time to move into your new home, you may need to budget for removal fees to transfer your possessions

We’re here to help you make informed decisions and navigate the exciting journey of buying your first home. Let Moor Mortgages be your trusted partner, ensuring a relaxed and enjoyable experience.

Why Moor Mortgages

Helen Dawson
Helen Dawson
Remortgage
Read More
Peter is a pleasure to deal with and knows what he's talking about! We spoke about our upcoming end of fixed deal mortgage and Peter gave some great advice and guidance and whilst we could have made the changes ourselves, we felt much better knowing that Peter was handling it for us and it was in safe hands. The changes were dealt with swiftly and Peter is never too far away if we have a question. Thanks Peter and we'll look forward to continuing to work with you!
Jenny Sowerby
Jenny Sowerby
Buy To Let
Read More
Peter comes highly recommended - he helped us apply for our first buy to let mortgage, there were lots of hoops to jump through but Peter made the whole process seem effortless with his excellent communication, knowledge and professionalism, we received an outstanding service and look forward to working with him again in the future. Thanks again Peter for all of your hard work, from everyone at JLK!
David Lowe
David Lowe
Home Mover
Read More
Great service and speedy. Peter's communication is very good and going that extra mile., his knowledge of the sector is exceptional. He spent extra time to get the paperwork sorted to beat deadlines. I would not hesitate in recommending Peter
Carrie Brown
Carrie Brown
Remortgage
Read More
Peter was very easy to make an appointment with and very flexible with how we could chat -in person or on the phone. Following a discussion about our needs he outlined how he could help and gave timescales. He came back to me earlier than planned and gave great advice. 100% would recommend.
Anthony Craddock
Anthony Craddock
First Time Buyer
Read More
We had some very specific needs and needed someone who was going to research and help us through the process. Peter was so helpful and friendly. Really appreciate the time taken.
Malcolm Roberts
Malcolm Roberts
Remortgage
Read More
Peter is a true professional who genuinely cares for his clients.
Imogen Oates
Imogen Oates
First Time Buyer
Read More
As first time buyers we were nervous but Peter helped us the whole way. Highly recommend
Andrew Brett
Andrew Brett
Foster Carer
Read More
Peter took the time to explain everything very clearly. Really good service.

As seen in: