Aldermore launches Help to Buy mortgages

Aldermore is the latest lender to announce details of its Help to Buy mortgages.

Aldermore has launched a range of mortgages for the second phase of the Government’s Help to Buy scheme.

They will be available both for those buying a new home and for people who want to remortgage.

Two mortgages are available: one for people wanting to borrow 90% of the value of a home (the loan to value or LTV) with an initial interest rate of 4.98% and one for people wanting 95% LTV with an intial rate of 5.28%. Both will have a fee of £999.

Challenging the big banks

Several other big banks have already released details of their Help to Buy mortgages, such as HSBC, RBS/NatWest and Lloyds.

But the last couple of weeks has seen Virgin Money and now Aldermore offer them some competition. The bank is the second to offer Help to Buy to remortgage customers, following on from Virgin Money, as well as to people buying a home.

Charles Haresnape, Managing Director of Residential Mortgages at Aldermore, said: “We are committed to lending to homeowners in the UK, especially those with small deposits, to get on the housing ladder and those who are unable to access mortgages from traditional high street lenders, despite being creditworthy.”

Help to Buy

The Help to Buy scheme was unveiled in the 2013 Budget and there are currently two versions working under the same banner.

The one you'll use depends on the type of property you want to buy. The Equity Loan version involves a Government loan to help you buy a new-build property, while the other offers a Government-backed mortgage guarantee on any type of property.

The Equity Loan Scheme requires borrowers to have at least a 5% deposit and they can then get an equity loan of up to 20% from the Government. This applies to any new-build houses worth up to £600,000 in England or £400,000 in Scotland.

The second part, the Help to Buy Mortgage Guarantee Scheme which was launched in October is available across the UK on any type of property, not just new-builds, up to a value of £600,000. Again, you'll need at least a 5% deposit.

For more read Help to Buy mortgages explained.

How the Aldermore mortgages compare

There are now several mortgages available through the Help to Buy mortgage guarantee scheme.

Aldermore is the first to offer remortgaging loans but here I’ve taken a look at some of the other mortgages available in the two-year fixed-rate space for 90% and 95% LTV.

The mortgages from Aldermore are the most expensive, as you can see from the table below.

They are also a lot more than the market-leading two-year fixed-rate mortgage for a 95% LTV. This is available from three building societies from the same parent group: Yorkshire Building Society, Barnsley Building Society and Norwich & Peterborough Building Society with a fixed rate of 4.69% and a fee of £845, or a rate of 4.89% and £500 cashback and a free valuation. But these are not included in the Government scheme.

Read New 95% mortgages are cheaper than Help to Buy for more on these mortgages.

Satander, Barclays and OneSavings Bank are set to join the Help to Buy scheme but have not yet announced any more details on the mortgages available.

See how much a mortgage could cost you and get help from an expert mortgage adviser

This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker, before acting on anything contained in this article.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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How to beat Stamp Duty

The questions you must ask before you buy a house