YBS launches £5,000 deposit mortgage for FTBs

Yorkshire Building Society (YBS) has launched a £5,000 deposit mortgage for first-time buyers (FTBs), enabling aspiring homeowners to potentially borrow up to 99% of the property value.

The society developed the fee-free deal in order to enable FTBs across England, Scotland or Wales with a £5,000 deposit to purchase a property valued at up to £500,000.

For someone buying a typical first-time buyer property at £200,000, a £5,000 deposit would equate to 2.5% of the purchase price, with the remaining 97.5% being borrowed as a mortgage.

The new mortgage is available directly to customers and via brokers through Accord Mortgages – the lender’s intermediary-only arm.

YBS director of mortgages Ben Merritt said research by the society indicated that £5,000 could shorten the time needed for first-time buyers to get mortgage-ready.

He added that it could help to encourage a “level playing field for those who don’t have financial support from their families to fall back on.”

Under the deal, which is available to FTBs only, borrowers with a deposit of at least £5,000 could take out a 5-year fixed-rate mortgage at 5.99%.

The maximum borrower age at the end of the mortgage term is 70.

The mortgage is not available for new-build properties or flats, and the society said loans are subject to rigorous credit scoring and affordability checks.

Nicholas Mendes, head of marketing at John Charcol, said: “YBS is the latest lender in the market to launch a new product supporting the first-time buyer market with the tag line of ‘£5k deposit on properties purchases valued at up to £500,000’, though not available for new-build properties or flats.

“Those that would benefit from such a deal are likely to be high earners and prospective buyers with a good credit score that just simply haven’t been able to save a deposit amid high rents.

“That said, while it’s encouraging to see lenders launch new products and expand their existing criteria sometimes these don’t always have the same impact especially when we consider comparable options in the market which help borrowers overcome affordability and/or deposit barriers.

“For example, Skipton Track record mortgage, Barclays’ Springboard or even the recent Own New proposition all support the first-time buyer and home mover market with less caveats and in some cases cheaper rates.”