Santander has launched a bold new mortgage offer that lets first-time buyers borrow an astonishing 98% of the property's value. This move, which marks a significant shift for high street lenders, aims to help those struggling to save up a deposit on a home.
The scheme is designed specifically for first-time buyers and requires a minimum deposit of £10,000 - significantly less than what many other deals demand. However, with this more generous approach comes a host of strict rules that experts claim will exclude many people from the market. Specifically, Santander has barred borrowers from purchasing flats, new-build homes, or properties in Northern Ireland.
The scheme also excludes self-employed buyers and requires both applicants on joint mortgages to be first-time buyers themselves. Furthermore, the maximum loan of £500,000 may prove a major hurdle for those seeking to purchase property in highly priced areas such as London, where the average house price stands at over £539,000.
Critics argue that these restrictions will limit how widely this product is adopted and may even put ownership further out of reach for many. Paula Higgins, chief executive of the HomeOwners Alliance, warned that flats - a main route into home ownership in urban areas like London - are being excluded from first-time buyer mortgage products, sending "a worrying signal" about the future of home ownership.
While some experts welcome Santander's move as a bold step towards helping more people on to the housing ladder, others see it as a cautious approach that fails to address broader issues. Aaron Strutt at Trinity Financial noted that this may tempt other big lenders back into offering similar sub-5% deposit mortgages but emphasized that borrowers seeking to borrow the maximum £500,000 will need to earn significantly higher incomes - over £112,000 per year.
Meanwhile, some lenders are now allowing homebuyers to borrow up to six times their income, paving the way for a more lenient approach. However, Santander's 98% mortgage remains an attractive option for those who can meet its requirements and may help bridge the gap between saving up a deposit and securing a property.
The scheme is designed specifically for first-time buyers and requires a minimum deposit of £10,000 - significantly less than what many other deals demand. However, with this more generous approach comes a host of strict rules that experts claim will exclude many people from the market. Specifically, Santander has barred borrowers from purchasing flats, new-build homes, or properties in Northern Ireland.
The scheme also excludes self-employed buyers and requires both applicants on joint mortgages to be first-time buyers themselves. Furthermore, the maximum loan of £500,000 may prove a major hurdle for those seeking to purchase property in highly priced areas such as London, where the average house price stands at over £539,000.
Critics argue that these restrictions will limit how widely this product is adopted and may even put ownership further out of reach for many. Paula Higgins, chief executive of the HomeOwners Alliance, warned that flats - a main route into home ownership in urban areas like London - are being excluded from first-time buyer mortgage products, sending "a worrying signal" about the future of home ownership.
While some experts welcome Santander's move as a bold step towards helping more people on to the housing ladder, others see it as a cautious approach that fails to address broader issues. Aaron Strutt at Trinity Financial noted that this may tempt other big lenders back into offering similar sub-5% deposit mortgages but emphasized that borrowers seeking to borrow the maximum £500,000 will need to earn significantly higher incomes - over £112,000 per year.
Meanwhile, some lenders are now allowing homebuyers to borrow up to six times their income, paving the way for a more lenient approach. However, Santander's 98% mortgage remains an attractive option for those who can meet its requirements and may help bridge the gap between saving up a deposit and securing a property.
this just feels like a temporary band aid to me 
anyone with decent savings or income is gonna be okay, but what about those who aren't? i'm not sure this helps as much as it seems 
can't buy flats or new builds lol what about all the urban folks in london who need affordable housing? and whats up with requiring both partners on joint mortgages to be first time buyers? seems like they want to make it even harder for people to get on the housing ladder 
. But, come on, who sets the rules so strict? 
They're basically excluding people from buying flats or new builds in Northern Ireland - what about those who need options? 
And £10k minimum deposit is still kinda steep for many first-time buyers... Not sure if it's a win-win situation here 
.
they're basically saying "we'll give you 98% but only if you follow our rules and live in the right area" it's like they're trying to keep the people who can't afford anything on the outside looking in. I mean, £10k deposit is a lot of cash even for first-time buyers 
! I mean, 98% loan to value? That's a game changer for first-time buyers who are struggling to save up a decent deposit 
. And the self-employed rule? That's just unfair to those who aren't lucky enough to have a stable income 
.
. Maybe we'll see more lenient approaches like borrowing 6 times your income soon 
. For now, this Santander offer is definitely worth checking out if you're a first-time buyer struggling to get on the ladder 
.