My First Mortgage is the latest addition to the growing first-time buyer market, with more and more lenders offering mortgages to make it easier for people to take their first step onto the property ladder.
Santander’s deal is for a five-year fixed-rate mortgage with an interest rate of 5.19%. There are no product fees and it comes with £250 cashback.
It is available through mortgage brokers or one of Santander’s mortgage advisers. Although the deal allows buyers to borrow up to 98% of the loan-to-value (LTV), there is a minimum deposit of £10,000.
Loans above 95% LTV and up to 98% LTV on this deal are for existing homes only. Customers who want to buy a new-build home or apartment can borrow up to a maximum LTV of 95%.
Santander’s usual affordability checks apply, allowing customers to borrow up to 4.45 times their salary.
David Morris, head of homes for Santander UK, said that last year the average first-time buyer at Santander made a deposit of more than £85,000. This, he said, was a figure that may seem unachievable to today’s aspiring homeowners.
“We want to help more people benefit from the stability and sense of pride that owning a home brings,” he added, “while maintaining our position as a responsible lender.
“My First Mortgage does just that and offers the opportunity to accelerate time to ownership, with the peace of mind that the buyer has received specialist mortgage advice and has certainty about what they will have to pay each month for the next five years.”
Is it okay? The verdict on Santander’s 98% mortgage
David Hollingworth, associate director at L&C Mortgages, said that while borrowers would still need to put down a minimum of £10,000 as a deposit, this could be as little as 2% of the purchase price. He thought the 5.19% rate was “well priced.”
“This is an important addition from a major lender, adding to the growing line of mortgages aimed at easing the hardships of first-time buyers,” he continued.
“There is an increasingly healthy range of mortgages for people with little or no deposit.
“These products have eligibility requirements so they won’t meet everyone’s needs and a larger deposit will still provide a wider choice at lower rates.
“However, the new deal with Santander should help more people access home ownership more quickly than they may have thought possible.”