Will the government-backed 95% mortgage guarantee scheme help buyers in Prestatyn, Abergele and Rhyl?

The new government-backed 95% mortgage guarantee scheme launched on 19 April 2021. The scheme has already attracted criticism, with detractors arguing that the scheme does not go far enough. So will the scheme offer genuine assistance to buyers that need it most, or is it a lame duck?

How does the 95% mortgage scheme work?

Mortgage lenders became understandably risk averse during the COVID-19 pandemic. The availability of 95% Loan to Value (LTV) mortgages all but dried up during the period.

The new government-backed guarantee is designed to give lenders the necessary confidence they need to start offering 95% LTV mortgage products again. The guarantee will compensate lenders for a portion of any net loss suffered if a property has to be repossessed.

The scheme should help both first time buyers and existing homeowners, to buy a (main residence) home for up to £600,000 with a 95% mortgage. Sole and joint buyers can apply. The scheme is available on repayment mortgages only and cannot be used to purchase new build properties.

As with any mortgage, you will still be responsible for making repayments and you will still need to pass the lender’s affordability checks.

The scheme will be available until December 2022 – unless the treasury’s allocated scheme limit of £3,900,000,000 is exceeded first.

Will the scheme help me buy a home?

In the weeks following the launch of the scheme, some commentators in the press were quick to point out that typical first time buyers with a UK median wage would not be able to afford to buy in around half of local authority areas.

More recently, however, research carried out by Quittance shows that, compared to many other parts of the country, buyers on an average household income for Denbighshire can afford to buy an average price property in Prestatyn, Abergele and Rhyl with a 95% mortgage.

For the research, an “average household income” assumes a property is being purchased by two people on the median annual salary in Denbighshire. Quittance used the latest HM Land Registry data to calculate the average price for homes bought in each town.

To calculate affordability, Quittance assumed 5% of the average property price would be supplied by the buyer as a deposit. A 4.5 multiple was applied to the average household income to determine if this figure was greater than the 95% of the property price required for a mortgage.

The average household income for Denbighshire is £42,076. Based on that figure, the maximum affordable mortgage for two people with that joint income is £189,342 (£42,076 x 4.5). This maximum mortgage affordability is greater than a 95% mortgage required to buy an average-priced property in several local areas, including Rhyl (£195,912).

For Flintshire buyers with the area’s average household income of £46,778, Prestatyn’s average property price of £205,100 is similarly affordable. The average property price for Abergele (£202,335), was also less than the maximum affordability for Conwy buyers, based on an average household income of £45,608.

Do all lenders offer the scheme?

Mortgage lenders are not obliged by the government to offer the scheme.

At the commencement of the scheme, major lenders including Barclays, HSBC, NatWest and Santander announced their participation. Other lenders are expected to follow.

Some lenders actually stole the march and started offering 95% mortgages in late March and early April. Other lenders, such as Nationwide will not be participating and have instead increased the mortgage income multiplier from 4.5 to 5.5.

The terms of the guarantee mean that lenders have to pay a commercial fee (calculated as a percentage of the loan) to the Treasury. Lenders will either have to absorb this cost or pass it on to the borrower in the form of increased interest rates.

With post-lockdown confidence increasing, many lenders have decided to accept the higher level of risk, without the added cost of the commercial fee, as it enables them to offer a more competitive interest rate.

To be able to offer the scheme, lenders also have to offer a 5-year fixed rate product as part of their 95% LTV range. Many lenders are not keen on this, as base interest rates may go up within the next 5 years.

How do I apply?

Once you have identified a mortgage product and lender, you can apply directly to the lender in the same way as applying for a normal mortgage. If you are using a broker, they will also be able to assist.

Should I buy with a government-backed mortgage?

You should certainly consider it. The mortgage market is dynamic and you may find that a government-backed guaranteed mortgage offers the best value at the time of application. From a buyer’s perspective, there is really no downside to this route.

However, you should still be prepared to look at deals outside of the scheme. At the time of writing, more than half of the 95% deals on offer sit outside the mortgage guarantee scheme. Mortgages outside the scheme may have lower rates.

If you can afford a larger deposit, there may be better alternatives. A 5% deposit may seem attractive initially, but higher interest rates will cost you more in the long run.

For first time buyers, Help to Buy equity loans are also still available, covering 20% of a property’s purchase price. Buyers can then pay a 5% deposit with the remaining 75% being covered by a Help to Buy mortgage.

Our Offices are now open!

After 3 months of lock down we are now pleased to announce that our offices are fully open, and all departments are operational.

We are of course mindful of the safety and well-being of our customers and staff. We have implemented strict social distancing and rigorous cleaning regimes throughout all of our offices.

Our Valuers, Negotiators, Photographers and Energy Surveyors are fully conversant with the government instructions in respect of home visits and viewings and do comply with the Covid- 19 requirements.

We intend to provide business as usual with refinements to improve our service and systems. Shortly all our properties will offer Virtual Tours so as viewers can enjoy a full tour of the property from the comfort and safety of their own home.

Our opening hours are Monday to Friday 9am to 5.30pm
Saturday mornings 9am to 12.30pm at:

Prestatyn Office 01745 888100 or email prestatyn@peterlarge.com
Rhyl Office 01745 334411 or email rhyl@peterlarge.com
Lettings Rhyl Office 01745 336699 or email lettings@peterlarge.com

Our opening hours are Monday to Friday 9am to 5.00pm
Saturday mornings 9am to 12.30pm at:

Abergele Office 01745 825511 or email abergele@peterlarge.com
Llandudno Office 01492 873854 or email llandudno@peterlarge.com
Lettings Llandudno Office 01492 210027 or email lettingsllandudno@peterlarge.com

If you would prefer to arrange a face to face virtual meeting we are available via Zoom, Teams, Whats App or FaceTime


Latest Information: COVID-19

In these challenging and quickly changing times, please be assured that it is very much ‘BUSINESS  but not quite as usual’ at Peter Large Estate & Letting Agents.

We are continuing to market properties ‘For Sale’ and  ‘To Let’, arrange viewings and take offers and rental applications! We will of course continue to closely follow Government announcements and will act on any instructions they provide.

Whilst this is a worrying and uncertain time, we take the safety and wellbeing of all clients and our own staff very seriously, so we are now asking a few simple questions before organising viewings and market appraisals to check they don’t present any higher risk level than normal.

Whilst viewing levels will inevitably decline, there are already signs that our online visits and enquiries are increasing, as many more people have more time on their hands than usual and are spending it planning for the future.

Brexit, and so we are set to leave!

After much debate and speculation, history was made when the UK people voted to leave the European Union. The Margin of victory for the ‘Leave’ campaign was narrow, at 51.9% to 48.1%, the turnout of 72% was high by the standards of recent General Elections. The UK will therefore leave the EU at some point in the next few years, becoming the first member to leave the Union. This came as a surprise to many people. No one really knows what the full impact of this decision will be. Apart from the predictable impact this has had on the strength of the pound and the Stock Market. We may not see any significant changes for a few years whilst the details are worked out.

What will happen to the property market? Interest rates will play a key role. Mark Carney the governor of the Bank of England has stated the UK’s financial system is much more robust than was the case at the time of the financial crisis. Banks are better capitalised and have been stressed tested using scenarios more severe than that implied by Brexit. The next scheduled Monitory Policy Committee is due to meet on the 14th of July and it is likely that the current bank rate will remain on hold at 0.5% and is expected to remain at this well into 2017. The Bank of England have said that they will do whatever it takes to keep the economy on an even keel and that they have the funds to do so.

It may well be that interest rates may fall further to an all time low allowing more first time buyers to enter the market. The fundamentals of the UK property market are that there is a shortage of supply; we live on an island with a limited amount of accommodation and an increasing population. Over a period of time, it is most likely that values and rents will continue to rise. We are members of the Relocation agency network with over 600 offices in the UK. Are immediate network neighbours in Cheshire, Wirral and Shropshire, whilst having seen a slow down prior to Brexit, all report more enquiries and improved sales after Brexit. The message from us is to keep calm and carry on and we intend to do so.

Insurance and Risk Management for Landlords

…Protecting your investment property Peter Large Estate Agents in association with HomeLet

Peter Large Estate Agents can advise on insurance cover and risk management services for Landlords available in association with HomeLet. HomeLet are insurance and risk management advisors to the lettings industry. HomeLet offer landlords and tenants specialist insurance cover and advice to help protect their investment against any unexpected risks they may face when letting.

Continue reading “Insurance and Risk Management for Landlords”

Relocation agent specialist joins Peter Large Estate Agents

Hayley Bardsley, Keeley Westwell & Jackies Roberts from Peter Large Estate Agents in Rhyl are celebrating after becoming an accredited Relocation Agent Specialist.

The accreditation was awarded by Relocation Agent Network and is achieved by completing a comprehensive online training programme, The Importance of Service.

A national network of independent estate agents (of which Peter Large Estate Agents is a member), Relocation Agent Network introduced the training programme to ensure each of their members provides the very highest customer service to those relocating around the UK.

To be successfully accredited, participants must complete three phases of learning, which begins with four training sessions on the importance of customer service. This is followed by three online seminars covering the Relocation Agent Network Referral Process and how best to help customers who are relocating around the UK. Finally, participants must convert their theoretical learning into a practical skill set by delivering assistance to three relocating customers.

By working with fellow members across England, Scotland and Wales, Relocation Agent Network members provide an exclusive relocation referral service to customers. For those relocating to Rhyl, Peter Large guides their customers through the daunting task of moving to an unfamiliar location. This includes local area information on schools and amenities, popular neighbourhoods and (of course) finding the right property for them. The introduction of a Relocation Agent Specialist to the Peter Large team, ensures that this process is made even smoother.
Peter Large said, “We take staff development very seriously and Hayley’s, Keeley’s & Jackie’s Relocation Agent Network accreditation is a great example of what can be achieved when staff are supported properly to improve their skill set. Of course, having a Relocation Agent Specialist in the team is also great for our relocating customers.”

Relocation Agent Network’s Managing Director, Richard Tucker said, “Selected by us as the best independent estate agent to represent the Network in Rhyl, Prestatyn & Abergele, Peter Large Estate Agents have proved themselves as the area’s Local Expert. So with the addition of an in-house Relocation Agent Specialist, they have gone one step further to provide relocating buyers and sellers with the very best customer service.”