For first time buyers, the challenge of getting onto the property ladder has become increasingly difficult. For many years, house price inflation (HPI), currently standing at 12.8%, has well exceeded general inflation. This means the cost of buying a home has become progressively higher in relative terms. Many schemes have come and gone from the market aimed at providing first time buyers assistance. However, most of these have addressed the issue of supporting first time buyers with 5% deposit mortgages. Much fewer schemes have addressed the issue of facilitating 95% mortgage lending. With rising house prices and the fact mortgage borrowing is based on income, many first time buyers are needing a “helping hand” to meet the affordability requirements.
Introducing Nationwide Helping Hand…
Available since 2021 and since February 2022 with a 5% deposit, Nationwide Helping Hand allows first time buyers a mortgage up to 5.5x their annual household income. The scheme facilitates higher mortgage borrowing enabling buyers to meet the affordability requirements to simply get a mortgage. With interest rates still relatively low, mortgage payments often remain below what buyers would be paying in rent on a comparable property. In this blog, we’ll look at the specifics of Helping Hand and who is eligible for the scheme.
Helping Hand is exclusively available to first time buyers. The scheme is available on all properties which meet standard Nationwide property criteria. Loan to value (LTV) restrictions apply depending on the type of property, again in line with standard criteria.
- Second-hand houses available up to 95% LTV
- Second-hand flats available up to 85% LTV
- New build houses available up to 85% LTV
- New build flats available up to 75% LTV
The biggest limitation to Helping Hand eligibility are the minimum income requirements. Currently, single applicants must earn £37,000 or above and joint applicants must have a combined income of £55,000 or above. The income requirements have also been subject to increases since the inception of the scheme. Helping Hand does not accept any form of self-employed income. Further limitations include the requirement for the mortgage to be on a capital repayment basis, it cannot be used in conjunction with any other scheme and it is only available on 5-year or 10-year fixed rate mortgage products.
Borrowing based on an income multiple of 5.5x, when having a 5% deposit, is simply unmatched across the top end of the market. There are few lenders who will use an income above 4.5x with a 5% deposit and few above an income multiple of 4.75x with a 10% deposit. If you want to learn more about Helping Hand, you want to know if you’d be eligible or you have any other mortgage or life insurance query, we’re here to help with free professional advice.