Budget 2021 95% mortgages back

[Bixwier]

i wonder what the details are going to be?

could a couple on min wage really get a 95% government mortgage with only a 5% deposit?

[Bixwier]

What I don’t understand is the government will be guaranteeing these 95% mortgages?

on the one hand I read ...........

The scheme, which will be subject to the usual affordability checks, will be available to lenders from April.


But it then I hear......


Lenders are typically less likely to approve mortgages when such a small deposit is put down, due to fears the home buyers will not be able to pay the full amount back. So the government will step in to guarantee them.

The economic impacts of the coronavirus pandemic mean that low-deposit mortgages have "virtually disappeared", according to the Treasury.

So so what are the details?

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[KTC]

A mortgage guarantee scheme to help people with small deposits get on the property ladder is set to be announced at next week's Budget.

Wait till next week to find out?

[Codger]

As I would like to sell some btl properties it would be nice to have some incentives to sell to tenants. How about a cgt break?

[boletus]

Loads of ways, e.g

First time buyers are exempt from FCA rules so lenders can make their own lending decisions.

[Codger]

I would give some tenants a 5% discount but there were rules stopping that working as a deposit.

[Bixwier]

Will it still be based on 4-6x earnings or will the government guarantee let people borrow more

[jpucng62]

As I would like to sell some btl properties it would be nice to have some incentives to sell to tenants. How about a cgt break?

Don't expect a CGT break but do expect a hike. someone has to pay for Coronavirus and it looks like property is an easy target. This would be ok if there was some sort of taper allowance -there is a difference between making £50k over 10 years or 1 yr!

A big hike in CGT is also likely to cause many LLs to hold onto properties they might have thought of selling, possibly reducing the stock available to the FTBs clutching their 95% Govt backed mortgages.

[jpucng62]

I have sympathy for people trying to get on the property ladder who can't save because they are paying rent, rent which is often higher than a mortgage would be. But I am concerned that someone with no savings at all may find buying a house breaks them financially - how often do you buy a house that needs no money spending on it?

As a country we need to build more affordable housing, both for purchase and for renting. Then we can do away with Govt interference in the mortgage market.

[Codger]

A lot of tenants have practical skills that are going to waste while they are renting. I remember when right to buy council houses started under mrs t. There was a blossoming of colour on the front doors of council houses as the new owners showed their stuff.
there was also a lot of odd rendering with fake stone!

[loanarranger]

I suspect the devil is in the detail so far as this high LtV is concerned.

I do not believe the government are going to use capital to fund the difference between what the lender will offer and the 95% loan required , this could in turn be a variant of the old Mortgage Indemnity Scheme which was provided by 4 leading Insurance Companies ( L&G , Phoenix Ins, EagleStar ,General Accident) A single Premium was paid by the borrower to cover the excess between 75% of the loan and up to 95%. The total loan however had to be suitably covered by the applicants income to meet the 95%. In the event of the loan defaulting , the lender had recourse to claim the amount of the loss on subsequent resale of between the base 75% & the actual loan advanced .
I cannot envisage any lender increasing its lending incomes to accommodate such high LtV’s , I may be wrong but I understood that it was to help those who struggled to raise the additional monies over and above the maximum presently available, InterestRates may not stay as low as they are at present if there are inflationary elements built into the anticipated post Covid 19 and whilst such rises may seem nominal borrowers will still face the prospect of higher interest rates down the line and mortgages at such high levels of LtV being on Capital & Interest rather than Interest Only this could prove to be the straw that breaks the camels back andcould result in a marked increase in repossessions and adversely affect the stability of the property market.
I may indeed be way off in my assumptions so lets hold our breath untilWednesday afternoon.

[loanarranger]

More details are being released and my interpretation posted yesterday is indeed to correct and which the government will put in place , it also extends to homemakers and NOT restricted to new homes.

[theartfullodger]

I had my 1st mortgage when interest rates jumped at least 6 % to BoE 17% under Thatcher. It's going to be painful,covid and Brex**** need to be paid for.

Sorry people

[Claymore]

Slightly off topic, but I have some mortgages coming up for renewal in May. Since November, I have been receiving letter after letter from the mortgage provider, reminding me about the renewal in May - urging me to either contact them or my broker so they can get me on to a new deal.

In all the years I have been a landlord, I've never had this before. Previously, just a reminder letter to let me know a deal is coming to the end.

Any ideas why the lenders are so keen?

[Bixwier]

Can you get more than 6x earnings?