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.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.