Halifax introduces a 95% mortgage for new build houses in UK

  • July 05, 2022

Halifax introduces a 95% mortgage for new build houses in UK

The UK property market proved to be resilient during the global pandemic and the biggest impact that had been witnessed was a sudden drop in enquiries – during the initial lockdown. It appeared to affect a particular section of the housing market, with a decline in queries from international buyers (unwilling to travel internationally) and the luxury properties in central London. However, the UK government came to rescue the star performer of the country by introducing a stamp duty holiday, which helped the market bounce back.

After these measures and the uplifting of the ban on international traveling, a considerable increase in the number of queries was noticed. Another notable factor is that the majority of property sales transactions in the UK property market are mortgage-based. And to cater to the needs of mortgage-based property buyers, one of the UK’s biggest lenders has unveiled a huge offer.

Halifax offers a 95% mortgage

Halifax, one of the most prominent lenders in the UK, has unveiled a 95 percent mortgage that can be used to buy a new build house.

It is notable that the UK government’s Help to Buy scheme has given more than 350,000 property buyers to step up on the property ownership ladder – with just a five percent deposit but soon the offer will be expired. Therefore, private lenders are also looking for alternative ways to help buyers with small deposits to start the home buying journey in the country.

From July 2022, Halifax announced to increase the maximum loan to value on new-build houses in the UK from 90 to 95 percent. The lender will extend its availability to include houses built by smaller developers. Shared ownership properties will also be entertained under this program.

This percentage of mortgage means that interested property buyers will need a five rather than a ten percent deposit.

“We recognize that getting a deposit together is still the biggest hurdle faced by most first-time buyers,” said Andrew Asaam, mortgage director, at Halifax. “This also underlines our confidence in the new build market and our support for the UK construction industry. Supporting new build homes supports the drive to net zero by making warmer, greener homes more accessible and attainable for potentially thousands of new buyers,” he stated further.

Who will be eligible for a 95% mortgage?

Currently, the announcement is less appealing for Londoners and people intending to buy property in the capital. It is because the price cap for the new build homes has been set at £570,000 and the scheme will apply to houses, and not apartments.

And according to real estate experts, though it is not impossible to find houses in this bracket in London only a handful of such newly built houses are available in this price bracket. Therefore, this scheme will be more relevant to the people considering moving out of the capital and ready to commute.

Experts welcomed this step!

Though the options are limited in the capital, especially and it can be a major shortcoming but the majority of real estate experts have considered this news important. Mostly because the lenders require a hefty deposit for new build homes because the prices are expected to drop later.

According to Ray Boulger senior technical director at John Charcol, “An important question here is: “Why now?” and I think that is down to the Government’s green agenda. Lenders are required to have a certain percentage of properties with an Energy Performance Certificate (EPC) rating of C or above by 2027 and most new build homes are above an EPC C.”

Moreover, it is expected that one of the prominent lenders has changed its policy for homes and it may change its criteria for apartments and flats too. Therefore, the news is exciting and significant.

The new deposit rules will be good news for buyers who lack savings and cannot rely on family to raise a heavy deposit, the new deal will help potential buyers with high incomes. Halifax will offer a maximum of 4.49 percent times a buyer’s income, which means a buyer who intends to buy a £400,000 property with a five percent deposit, would need to earn almost £85,000.