Thinking about the Government's Help to Buy mortgage scheme? We take a look at how the mortgages compare to the other options out there.
Both parts of the Government's Help to Buy mortgage scheme have now launched.
The equity loan part, which offers a Government-guaranteed loan of up to 20% of a new-build home’s purchase price, has been around since April. This is available (in different forms) in England and Scotland.
And it’s now been joined by the mortgage guarantee part. This is where the Government essentially acts as the ‘guarantor’ on a mortgage of up to 95% of a home's purchase price. This is available across the UK. For more on how the scheme works, have a read of Help to Buy mortgages explained.
The launch of the mortgage guarantee part prompted lenders who are not participating in Help to Buy to launch their own 95% mortgages. In terms of shorter-term fixes, these non-Help to Buy mortgages have bettered what’s on offer via the scheme.
Let’s have a look at the mortgages on offer, firstly via the equity loan scheme in England, which helps with purchasing a new-build home worth up to £600,000. All the mortgage rates below are for a 75% loan-to-value of a property.
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Help to Buy two-year equity loan
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
Nationwide two-year fixed |
2.34%/2.74% |
£900 (£400 for first-time buyers)/£0 |
|
Halifax two-year fixed |
2.94%/3.34% |
£999/£0 |
|
Leeds Building Society two-year fixed |
2.99%/3.29% |
£999/£199 |
|
NatWest/Royal Bank of Scotland two-year fixed |
3.15% |
£0 |
|
Santander two-year fixed |
3.24% |
£0 |
|
Santander two-year tracker |
3.24% (Bank of England Base Rate + 2.74%) |
£0 |
Help to Buy three-year equity loan
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
Nationwide three-year fixed |
2.64%/2.94% |
£900 (£400 for first-time buyers)/£0 |
|
Teachers BS three-year discounted variable* |
2.89% |
£99 |
|
Barclays three-year fixed |
3.19% |
£0 |
|
Woolwich three-year fixed |
3.49% |
£0 |
*At least one applicant must be a qualified teacher or lecturer
Help to Buy five-year equity loan
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
Nationwide five-year tracker |
2.94% (Bank of England Base Rate + 2.54%) |
£0 |
|
Nationwide five-year fixed |
3.34%/3.54% |
£900 (£400 for first-time buyers)/£0 |
|
Santander five-year fixed |
3.49% |
£0 |
|
NatWest/Royal Bank of Scotland five-year fixed |
3.65% |
£0 |
Help to Buy equity loans in Scotland
In Scotland, the Help to Buy equity loan scheme helps to buy a new-build home worth up to £400,000. As the scheme is relatively new north of the border, there are only three lenders participating at the moment.
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
Nationwide two-year fixed |
2.34% (2.24% for existing Nationwide mortgage customers) |
£900 (£400 for first-time buyers) |
|
Nationwide three-year fixed |
2.64% (2.54% for existing Nationwide mortgage customers) |
£900 (£400 for first-time buyers) |
|
Bank of Scotland two-year fixed |
2.94%/3.04% |
£999/£0 |
|
Barclays three-year fixed |
3.19% |
£0 |
Help to Buy mortgage guarantee
Now let's take a look at how the initial mortgages being offered under the mortgage guarantee scheme compare to other mortgages out there that are available if you just have a 5% deposit.
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
NatWest/Royal Bank of Scotland Help to Buy two-year fixed rate |
4.99% |
£0 |
|
4.99% |
£0 |
|
|
5.19%/5.59% |
£995/£0 |
|
|
5.19%/5.69% |
£999/£199 |
|
|
NatWest/Royal Bank of Scotland Help to Buy five-year fixed rate |
5.49% |
£0 |
|
5.59% |
£0 |
|
|
5.95% |
£195 |
If you’re looking for a shorter-term fix, you can definitely do better than the Help to Buy mortgages on offer. Clydesdale and Yorkshire Banks’ three-year mortgage offers an extra year for the same combination of initial interest rate and no product fees as NatWest and Royal Bank of Scotland’s two-year Help to Buy equivalent.
However, for a longer fix, NatWest and Royal Bank of Scotland's five-year Help to Buy fix looks like a good deal compared to the rest of the 95% market at the moment.
Top 90% mortgages
But what if you could get a 10% deposit together and therefore don’t necessarily need to use the Help to Buy scheme? Let’s have a look at some of the top mortgages in this category right now.
|
Lender and mortgage |
Initial interest rate |
Product fees |
|
3.99% |
£0 |
|
|
Loughborough BS three-year fixed |
3.95% |
£499 |
|
Leeds BS three-year fixed |
4.29% |
£199 |
|
Nottingham BS five-year fixed |
4.39% |
£299 |
Compared to these rates, the Help to Buy equity loan mortgages look very competitive, although we shouldn't forget that there is an interest charge on the equity loan as well after five years in England.
But with more mortgage guarantee mortgages coming in the next few months from the likes of Barclays, Santander, Virgin Money and Aldermore, it could well be worth waiting to see if their rates are any cheaper. Or indeed what the lenders not participating in Help to Buy come up with. And if you're not far away from having a 10% deposit it could be well worth going for a final push as this will open up many more options.
All of the above factors are definitely worth bearing in mind if homes in the area you want to buy in are not selling fast.
See the latest mortgage rates and get expert advice
This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker (such as one of our brokers here at lovemoney.com), 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.