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Help to Buy Phase 2 Mortgage Loan Examples

Housing-Market / UK Housing Oct 08, 2013 - 06:03 PM GMT

By: MoneyFacts

Housing-Market

The Help to Buy scheme has arrived earlier than originally anticipated, albeit amid a certain amount of confusion around the finer details.

Based on the details to surface, Moneyfacts has worked out how much of a saving these deals will mean to borrowers and how much money will come out of your pocket.


Example 1:

Halifax – H2B phase 2

For a loan of £20,000, a 2 year fixed rate at 5.19% with a fee of £995 will result in a monthly payment of £1,191.43 and an overall true cost of £29,589.32.

Example 2:

RBS – H2B phase 2

For a loan of £20,000, a 2 year fixed rate at 4.99% with no fee will result in a monthly payment of £1,168.02 and an overall true cost of £28,030.48.

Example 3:

Newcastle BS – Not part of the H2B scheme

For a loan of £20,000, a 2 year fixed rate at 5.95% with a fee of £195 will result in a monthly payment of £1,282.50 and an overall true cost of £30,975.

Source: Moneyfacts.co.uk

Sylvia Waycot, Editor at Moneyfacts.co.uk, said:

“From the consumer viewpoint, H2B phase 2 is great news for people looking for a 95% mortgage as not only are there going to be more of them around but the requirement to have a squeaky clean credit history is being slightly relaxed, so if you were rejected for a mortgage recently you might find that you are now in luck as long as you can afford the monthly repayments.

The lender only has 80% of the loan at risk if the mortgage goes pear-shaped thanks to the 5% deposit and the 15% that the Government is standing guarantor over, but they are being charged a fee for the insurance. This fee is being passed on to the borrower which means that whilst the H2B 95% deals are lower than those not part of the scheme, they are not as cheap as an 80% deal.

I expect that in the New Year we will start to see some real competition on rates as more and more lenders vie for our business.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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