The Nationwide has a savings/mortgage program in place that could help first time buyers get a 5% deposit deal. Known as Save to Buy, this account asks you to save in order to qualify for a 95% LTV loan. How does the system work?
To start with, you need to open a Save to Buy savings account and to put money into it regularly. If you then hit all the qualifying criteria, you can apply for a low deposit deal. This basically means you need to save at least £50 a month for 9 out 12 consecutive months. Once you have held an account for six months you can apply for one of the company’s specialist mortgages.
If you are eligible to borrow, you can apply for a 5% deposit deal. The rates you are given will depend on when you apply. The Nationwide says that it will offer either the same rates as it gives to its remortgagers or you can apply for any other first time buyer deals on offer.
In addition, the savings you make will also contribute towards a cashback offer that will be paid upon completion. This is graded (between £250-1,000) to how much you have saved and starts at £2,500 (you don’t get cashback for lower amounts than this).Your savings account is given a rate ‘promise’ that guarantees an interest rate of 2% above the Bank of England rate.
You do need to be aware that being given a Save to Buy account doesn’t guarantee that you’ll get a mortgage when you do get round to applying. You’ll still need to go through standard checks and applications. You also have to qualify as a first time buyer by the Nationwide’s rules so you can’t have had another mortgage in the three years before you open your Save to Buy account. You also have to apply for the associated mortgage between 6 months-3 years of your acount opening date.
To learn more, visit the Save to Buy page on the Nationwide’s website.
