Yorkshire Building Society Launches Innovative Mortgage Product
In a move that is set to shake up the mortgage market, Yorkshire Building Society has launched a fee-free mortgage with a deposit of just £5,000. This product can be used to buy a property worth up to £500,000, making it an attractive option for first-time buyers.
A Game-Changer for First-Time Buyers?
The mortgage costs 5.99% for a five-year fixed rate, and is available through the lender’s intermediary arm, Accord Mortgages. While it cannot be used for new builds or flats, this product is a significant step forward for those struggling to get on the property ladder.
As Ben Merritt, director of mortgages at Yorkshire Building Society, notes, “While £5,000 represents a 1% deposit for those who need to borrow the maximum amount available, the key is that customers are still putting money into a deposit, they still have to demonstrate strong creditworthiness and pass an affordability assessment to be eligible for a £5,000 deposit mortgage.”
Applying for a mortgage can be a daunting task, but innovative products like this one can make it more accessible.
A Balanced Approach
Mark Harris, chief executive of mortgage broker SPF Private Clients, welcomes the new product, but notes that there are still stringent affordability assessments and credit scoring requirements in place. He also points out that borrowers will have to take out a five-year fixed-rate product, and that there are property exclusions, such as no flats or new-builds.
First-time buyers often struggle to raise a deposit, but products like this one can help make homeownership more accessible.
However, Harris also acknowledges that not everyone has access to the “Bank of Mum and Dad,” and that this product can help level the playing field. He notes that while there is a risk of negative equity, the five-year fixed-rate product means that borrowers will be paying back a small amount of capital as well as interest each month, improving their equity stake.
Getting on the property ladder can be tough, but innovative mortgage products can help make it more achievable.
A New Era for Mortgages?
While critics may question what will happen if the buyer loses their job and can’t afford their mortgage payments, Harris points out that the same risks apply to renters. This product is a significant step forward for those struggling to get on the property ladder, and could mark a new era for mortgages.
Mortgage brokers can help borrowers navigate the complex world of mortgages and find the right product for their needs.
Overall, Yorkshire Building Society’s new mortgage product is a welcome innovation in the mortgage market. By offering a fee-free mortgage with a deposit of just £5,000, it can help make homeownership more accessible to first-time buyers.
Homeownership is a dream for many, and innovative mortgage products can help make it a reality.
