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First-time buyer mortgages are back as banks launch a host of new deals and cash incentives, with TSB and the digital bank Atom joining forces with the Yorkshire Building Society to launch a range of loans for borrowers with a 10 per cent deposit.
Virgin Money have also cut their rates while Nationwide and Platform, owned by the Co-op Bank, announced plans to scrap restrictions on gifted deposits.
Despite the new incentives, rates have increased dramatically. The average two-year fixed rate for a 90 per cent mortgage has jumped from 2.05 per cent in January, to 3.55 per cent in October, according to Bank of England figures.
Accord charges 3.69 per cent for a two-year deal, and 3.79 per cent for a five-year deal, with a £995 fee.
TSB and Platform are also offering five-year deals at 3.79 per cent. However, TSB has a £995 fee and offers £500 cashback, whereas there is no fee for Platform's deal - and it has a £1,000 cash incentive.
Atom charges 3.81 per cent on a five year deal with no fee and £500 cash back.
In other news for potential home buyers, the UK government announced a new Help to Buy scheme last month.
Homes England put out a statement which said first-time buyers interested in new-build homes can apply for the new Help to Buy: Equity Loan scheme, covering 2021-2023, with applications opening from Wednesday 16 December.
A Help to Buy: Equity Loan sees the government lend potential buyers up to 20 per cent of the cost of a new-build home (properties in London can see the government loan up to 40 per cent). Homebuyers are then required to pay a deposit of 5 per cent or more, and arrange a mortgage of 25 per cent or higher to make up the remaining amount.
To be eligible for the scheme, the house must be newly built and worth up to £600,000. Homebuyers are also advised to be able to afford the monthly fee and interest payments, not own any property previously, and cannot sublet or rent out the property after they have bought it.
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