Budget 2021 95% mortgages back

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    Originally posted by loanarranger View Post
    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.
    But only for under 40 yr olds?

    what if onein the couple is 7nder 40 can you take both earnings into account?

    i can see lot of men marrying younger women to get 95% mortgages 😝


      Originally posted by Claymore View Post
      Slightly off topic, but I have some mortgages coming up for renewal in May. ....
      "Renewal!" or just end of fixed rate period?? Currently I'd stay on variable...

      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...


        Claymore is correct in querying such a change in lender attitude by lenders; the reality is that margins are thin because of low interest rates and the costs of new mortgage originations necessitates having to be seen as keen to retain existing mortgages so the trade off is a retention mortgage , slightly more expensive than that for new business but cheaper than the prevailing reversionary rate, when one takes into account the costs of take a mortgage elsewhere the odds are that the lender might retain the current business but that is the responsibility of the broker to do a forensic comparison of all available mortgages.


          Somewhere in this thread someone raised the question of a lender advancing a mortgage based on 6 x income? Without being blunt a categoric No as this would tantamount to bordering on the irresponsibility, how on earth would a borrower manage if rates increased and certainly would become hostage to that lender as it would be extremely doubtful if any other prudent lender would be offering remortgage facilities using such dubious income multiple.


            So the 95% mortgage doesn’t change generation rent they will all still be renters


              Whilst slightly contentious but factual, the younger generation have become hooked on low interest rates, ease of access to credit and the “ Must have it now syndrome” which often is the barrier to eligibility for qualifying for a mortgage.
              The 95% mortgage facility is not a panacea to the difficulties of getting onto the property ladder but as an opportunity for those with financial prudency to have a better chance of becoming homeowners than often is the case at present.
              i appreciate that this might not be seen as being kind but I express my thoughts based on a lifetime as a lender and 14 years as a mortgage broker.


                I am pleased to read the criteria for the facility of 95% mortgages as announced in the budget mirrors my understandings and comments at the weekend. Nothing will change in terms of affordability assessment but for those who have kept within normal domestic budgetary constraints the ability to borrow 5% more than what was previously available and in some instances 10% allows for prospective 1st Time Buyers and indeed Home Movers to look at properties which previously might not have been able to afford.

                Bixwier makes a comment that the status of generation renters will remain renters is slightly wrong , there is a growing movement amongst the younger generation to live life to the full and enjoy the benefits that their incomes allow and are more than happy to mirror those of their european counterparts who have no aspiration to own their own homes until they are in their late 30's/early 40's.

                Everyone has a choice on how they live their life.


                  Posted on bbc website ( 3/3/2021 ) : The chancellor also announced a new "mortgage guarantee" in the Budget.

                  Starting in April, the government will provide a guarantee to lenders who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000.

                  The government says the scheme will allow more people to become homeowners.

                  Lloyds, NatWest, Santander, Barclays and HSBC will be offering 95% mortgages from April, with other lenders including Virgin Money expected to launch products later.


                    Last summer, the government temporarily increased the amount at which stamp duty is paid to £500,000, for property sales in England and Northern Ireland.

                    The tax break was due to end on 31 March, but Mr Sunak announced in the Budget that it will now end on 30 June.
                    After this date, the starting rate of stamp duty will be £250,000 until the end of September. Stamp duty will then return to the usual level of £125,000.

                    The move was aimed at helping buyers who might have taken a financial hit because of Covid. It could save them as much as £15,000, if they were buying a property of £500,000 or more.


                      What does the government guarantee mean?

                      if only 5% deposit and they default on the mortgage for whatever reason then they are in negative equity then does the government start paying the mortgage?


                        No, may I suggest you read my original post, but to short circuit the difference between say 75% of the lower of the purchase or valuation and the actual loan of say 95% will be guaranteed by the government. If a loss on possession and resale doesn’t exceed that amount the lender will get the sum reimbursed, however if the loss is greater taking account of the accrued mortgage arrears and associated fees, then the difference becomes the liability of the homeowner and the debt would be perused for up to 6 years. This is why the lender will still use their affordability assessments in determining whether the applicant(s) can afford the loan both on the initial rate but importantly the reversionary rate.


                          Just like rent arrears it will never be paid back and written off six years down the road


                            But the sting in the tail is that it might probably exclude you from obtaining another mortgage during this period and then it is back to renting. As in life all actions carry their own consequences.


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                              You make a fair point and one which I cannot but agree with but as with what I try to do on the Forum I simply report the news and media comment from lenders and other related parties.
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