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 reopen on the 12th April

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. Many of our properties 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 5pm
Saturday 9am to 4.30pm

Weekend viewings Saturday & Sunday by appointment.

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

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

STAY ALERT TO STAY SAFE

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

STAY ALERT TO STAY SAFE

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.

How The New Wales Tenant Fee Rules Affect You

As a leading North Wales Estate Agent, Peter Large has always believed in offering a fair and transparent service to both tenants and landlords.

A new law came into force on 1 September 2019 which is a major change to the fees tenants in Wales have to pay, so we are providing the following guidance for both tenants and potential landlords.

Guidance for New Tenants

Here is how the new laws affect new tenants who are taking out a new tenancy agreement or signed an agreement after 1 September 2019.

What you don’t have to pay

New tenants after this date no longer have to pay fees for:

  • checking references or credit checks
  • administration
  • drawing up a tenancy
  • renewing a tenancy
  • amending a tenancy term, for example adding in more conditions
  • requesting or amending a tenancy if one joint tenant leaves and is replaced by another
  • viewing a property
  • drawing up an inventory
  • arranging a guarantor
  • inspecting a property at the end of the tenancy.

Charges you do have to pay

New tenants will still need to pay the following charges:

  • rent
  • security deposits (if required)   
  • holding deposits to reserve a property. This is equivalent to one week’s rent and will be offset against your first month.
  • late payment of rent or breach of a tenancy agreement (known as default payments)
  • any council tax, utility bills, communication bills or TV licence (unless these services are provided as part of your tenancy agreement)

Guidance for Existing Tenants

With regard to existing tenancy agreements that were taken out prior to 1 September 2019, any charges due under your existing tenancy agreement will still apply.

Guidance for Landlords

If you are already one of our landlords, we will have been in touch to advise you of any changes to your agreements with us where needed.

If however, you are a landlord with a property to let, unsure of what costs are involved, why not get in touch?

With the new rules now in place, and very strict guidelines for renting out properties in Wales, many landlords have inadvertently fallen foul, with a number of private landlords receiving large fines.  

Our professional service enables us to guide landlords through the complex maze of letting property in Wales.

We generally let properties more quickly, and attract desirable, high quality tenants with a stable income, which enables us to protect your property investment.  We can take care of every aspect of your property rental, leaving you free to get on with running your business.

For more advice on any aspect of letting your property or taking out a rental agreement on one of our properties, please do not hesitate to get in touch with our professional lettings team.

Abergele office awarded ‘Best Estate Agent in Conwy County’

We are delighted to announce that our Abergele branch has won the prestigious Gold British Property Award 2019 for Conwy County.

The British Property Awards are particularly prized by estate agents – the award sees estate agents judged on a town by town basis, and agents must meet a minimum set of criteria over a number of months. 

In the event none of the agents in a town meets the criteria, no award will be made – and the Gold Winner is the highest award for any given area, so this is very welcome news for our hard-working staff.

A spokesman for the British Property Awards explained:

“We take our jobs very seriously.  At The British Property Awards, our mission is to provide a useful award for the consumer on a local level, highlighting excellence within their town, an award that can be trusted and used as part of their decision making process.

“Gold Award Winner for Conwy, Peter Large, performed outstandingly throughout the extensive judging period, which focused on customer service levels over more than 25 separate criteria.” 

Director and Company Secretary, Avril Large, said the award came as a welcome surprise for the chain’s Abergele branch:

“Excellent customer service is something we pride ourselves on across all our estate agency branches, so it is great for our Abergele branch to see their hard work recognised with this Gold award.  

“I really want to thank the team who work so hard, not to win awards, but to serve our customers to the best of their ability.  I am really proud of them.”

We have also been shortlisted for a number of other national awards which will be announced later in the year – this is great news, not just for the Abergele branch but for the whole team in our North Wales estate agency branches.