Yorkshire Building Society launches lowest-ever 0.89% mortgage rate – but you’ll need a hefty deposit
Moneyfacts said the 0.89 per cent mortgage rate is the lowest it's ever recorded in 29 years
A MORTGAGE deal with the lowest rate experts have ever seen at 0.89 per cent has been launched as the home loans price war hots up.
Yorkshire Building Society is offering the loan to home buyers and people looking to remortgage - but they will need to have a deposit of at least 35 per cent.
The two-year 0.89 per cent standard variable rate (SVR) mortgage is being offered at a discounted rate.
The discounted level is 3.85 per cent - and when the two-year period is up the rate goes up to Yorkshire Building Society's SVR, which is currently 4.74 per cent.
Because the rate is variable, if the Yorkshire's SVR reduces during the two-year period, the 0.89 per cent rate could also go down further.
But there is also a chance that the rate may increase.
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Financial information website Moneyfacts said the 0.89 per cent mortgage rate is the lowest on its records, which go back to 1988.
Borrowers wanting to take out the 0.89 per cent deal will also need to stump up a product fee of £1,495, or alternatively they could opt to pay a lower fee of £995 and have a higher mortgage rate of 1.05 per cent.
James Farrow, senior mortgage manager at Yorkshire Building Society, said: "The cost of funding has fallen in recent weeks and as a financially strong building society with no external shareholders to satisfy, we have the ability to pass this on to borrowers."
How to get help buying a house
THERE are several government schemes available to help you get onto the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You’ll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a 10 per cent deposit as well as money to cover stamp duty and other fees. You’ll also need to find a mortgage lender that is willing to lend on shared ownership properties.
Rachel Springall, a finance expert at Moneyfacts, said borrowers looking for more flexibility over the shorter term may prefer a discounted variable deal, while those looking for some security may want to opt for a fixed rate.
She said: "In such a low interest rate environment it would be ideal for borrowers to consider overpaying their mortgage.
"As with any option, borrowers would be wise to weigh up the entire package before entering any arrangement."
Last month, Nationwide launched a new mortgage deal that allows parents to raise funds from their property to help their children get on the property ladder.
Parents who sign up to the deal are allowed to borrow extra money from their own mortgage to give to a child or grandchild to buy a house.
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