Mortgage companies back in business for first time buyers with 10 per cent deposits

Mortgage companies back in business for first time buyers with 10 per cent deposits

First-time buyers looking for a mortgage have the luxury of choice again after lenders brought back deals for borrowers with 10 per cent deposits.

Low-deposit mortgages are generally more profitable for lenders because their rates are higher, but banks and building societies have been unwilling to offer them because of worries over borrowers’ ability to repay while incomes are reduced by coronavirus and because they had to stop physical valuations of properties until last week.

Accord, part of Yorkshire Building Society, reintroduced 10 per cent deals on Wednesday, while Virgin Money and Clydesdale plan to do the same next week. HSBC has brought back 10 per cent deals on loans up to £400,000. But self-employed borrowers may find themselves locked out of such deals because many lenders, including NatWest and Halifax, have tightened their affordability rules and are demanding more proof of people’s ability to pay. This might mean three recent months of statements to show how they have been affected by the pandemic.

Mark Harris, the chief executive of the mortgage broker SPF Private Clients, said: “Sadly, self-employed borrowers are being negatively affected. Hopefully some will have been able to make a profit through this crisis or will return to the black post-lockdown, so their borrowing options are not too curtailed. Others may need to wait until lenders relax their stance.”