Martin Lewis Reveals New 5% Deposit Mortgage Scheme | This Morning

The new Govt 5% deposit mortgage scheme started on Monday – but Martin Lewis says that doesn’t automatically mean you should get one… He’s here to explain the changes and what it means for you. Plus, he’s got some top tips to boost your house deposit savings.

And now martin lewis is here to talk mortgages with us and in particular the new government-backed five-deposit mortgage uh so let’s start there good morning martin festival um what is the new government well the government seems to be very keen to stimulate the housing market it’s worth noting the housing market is already highly stimulated with uh prices at

A record high we’ve had the help to buy equity loan scheme we’ve had the stamp duty cut and now we’ve got this new five percent mortgage deposit scheme i do find this a little bit interesting because it’s really strange isn’t it um as a nation we whinge rightly when things go up in price and get more expensive but for some reason many people celebrate it when

House prices go up and we push up the prices of housing now yes some will make a paper gain but the truth is unless you’re selling and not rebuying or selling and downsizing house prices gains don’t really help and they cleave away so many people who will never be able to get on the housing ladder because prices continue to go up so these continued push by the

State to try and what what effectively pumps the housing market whether it helps or hinders is a question but i’ll get off my soapbox and explain what’s going on so on monday we saw the launch of the new mortgage guarantee scheme now what that actually means is the government has said to lenders we will underwrite we will cover some of the risk of you lending

Mortgages to people in order to enable you to offer more 95 loan to value mortgage loan to value is the key term ltv it’s often shortened to that’s how much of your houses value your borrowing so if you’re borrowing 95 of your house’s value you would need a five percent deposit so these are five percent deposit mortgages and that’s what this scheme does now i

Do need to put a big caveat in here the fact is there are other now 95 mortgages on the market not all the mortgages on the market are mortgage guarantee scheme mortgages but the lenders who are offering it and that includes big names like barclays hsbc lloyd’s natwest halifax and santander they’re often you know putting in their marketing this is a mortgage

Guarantee scheme mortgage as if that actually means something for you well let me be very plain it means nothing to you what the government has done is put something in that enables lenders to be able to put out more five percent deposit mortgages but these mortgages aren’t special you shouldn’t go for a mortgage just because it’s a mortgage guarantee scheme

Mortgage if you want a five percent deposit mortgage look at all the five percent deposit mortgages and choose the one that has the best terms the fact it’s under this scheme is neither hither nor tither to you it helps the lenders it doesn’t impact the borrower and i think there’s a little bit of clever marketing hype going on out there get a mortgage guarantee

Scheme mortgage backed by the government it doesn’t actually give you anything extra it’s just the fact it’s available is because it was underwritten by the government right got you so who’s who’s taking part in the scheme well lots of the big lenders are taking part loads of them you know uh i mentioned some of them earlier uh and there are now a lot of five

Percent mortgages out there what i would say though is look i’ve never been a fan of five percent deposit mortgages you’ve only got a little bit of cash in there and and the truth is these are still relatively expensive mortgages the cheapest of these out there is a is a fix at 3.69 roughly with a 600 pound fee but if you could push for a bigger deposit

Your mortgage rate would be cheaper in fact the way it works is every 5 bigger deposit you have up to 40 which i know is huge it tends to get a little bit cheaper so certainly look look if you you’re only just scraping five percent and you’re desperate to get on the housing bladder i always worry about desperation but anyway then then you’ll have to do one of

These or a five percent deposit mortgage but let’s say you’ve saved up eight or nine percent then i would really urge you to push to get to that next barrier that ten percent level or if you’re on fourteen percent go to fifteen if you’re on ninety percent go to twenty because the mortgage rates get much cheaper just to show you how big an impact this is on a

Two-year fixed rate for 150 grand property you’d pay 3.69 with a 5 deposit you’d pay 1.13 with a 60 deposit and instead of paying nine grand a year well okay partly because the deposit’s bigger you’d be paying four thousand six hundred pounds a year nearly half the cost if you could push for a little bit more in your deposit and one quick tip that they very

Rarely mentioned to you i say go to five percent actually i’d always go 100 pound beyond the limit because then that tends to ease acceptance because underwriters think oh they haven’t just squeezed to the limit they’ve got a little bit beyond it so again five percent mortgages are available but whether you should get them or not is a much bigger question and

I would always be looking to try and get to 10 if you can how do you how do you boost your deposit well there’s a couple of products out there one you have to have already which is the help to buy isa and one that you can still open if you’re aged 18 to 39 which is the lifetime isa with both of these the amount of money you save towards your first property got

To be a first time buyer but don’t worry if you’re buying with someone who isn’t this is an individual thing so as long as you’re a first-time buyer never owned a property you can get one and the state will add 25 on top now in a lifetime isa which is the one that’s available now you can save up to 4 000 pounds a year in it and so 25 on top of that is a thousand

Pounds if were doing it for three years and you saved the maximum 12 grand in it you would have 15 000 pounds towards your deposit an extra 3 000 pounds for free and i’ve said before on the program for anyone listening you know maybe it’s for you your child who’s 18 years of age and he’s not even close to thinking about ever buying a house one of the the weird

Rules in the lifetime isa is that to use the bonus as a first-time buyer you have to have had the lysa open for one year it’s got to have been open a year only then can you get the bonus so even if you’re not thinking of this now if you’re in that age category and you’re a first time buyer go and open one with one pound put a quid in there that gets the clock

Ticking and then when you do want to use it in the future you can put your 4 grand in you’ll get your 1 000 bonus and you can use it straight away because you’ve had it for over a year there is a minor risk on this that if you take the money out not for buying a house there’s a six percent 6.25 effective penalty but if you’re just talking about putting a quid in

There well a quid uh six percent of that is six p i think you can afford to lose the 6p for the chance of having the facility a couple of couple of other things i should note the the mortgage guarantee scheme is only for properties up to six hundred thousand pounds and they can’t be new builds lysos is only for properties up to four hundred and fifty thousand

Pounds helped to buy isis are only for properties up to two hundred and fifty thousand pounds apart from in london when it’s four hundred and fifty thousand pounds right brilliant martin thank you as always fully comprehensive

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Martin Lewis Reveals New 5% Deposit Mortgage Scheme | This Morning By This Morning