Halifax lowers deposits on new builds to 5%

Halifax has this morning lowered the minimum mortgage deposit required on new build homes to 5% from 10%.

The UK’s largest lender says that “putting a sufficient deposit together is often the biggest hurdle first-time buyers face in getting on the housing ladder”. Halifax believes that today’s move ‘will make that significantly easier for many’.

Based on the UK’s average house price of a £289,099, the minimum deposit needed could now be as low as £4,000.

Halifax says that bringing the maximum LTV in line with existing properties also has the advantage of making greener homes more attainable for first-time buyers.

Due to the higher standards required of homes currently being built, since 2012, their average energy performance certificate rating is B or better, compared to D or worse for homes built before 1982.

“This improved energy efficiency means owners of new build houses save over £500 per year on household bills per year,” the company said.

Halifax has also removed the requirement that higher LTV new build loans above 85% be through developers on its panel. This will increase the availability of 5% deposit mortgages to houses constructed by Britain’s more than 2,000 small housebuilders.

Halifax points out that Shared ownership is also an increasingly attractive choice for many of those struggling to get on the housing ladder, particularly where homes are above the national average.

“By buying part of the property initially and increasing that share at a point in the future, shared ownership is another solution for first-time buyers who find the first step to home ownership difficult,” the lender said.

Halifax will now accept a 5% deposit on both new build flats and houses in shared ownership schemes run by housing associations. Shared Ownership is available where the share being bought is between 25% and 90% of the property’s value. Buyers can now borrow up to 95% of their share of the home with the lower deposit requirement.

Andrew Mason, head of strategic partnerships – housing, at Halifax, said: “We recognise that getting a deposit together is still the biggest hurdle faced by most first-time buyers, and these changes could reduce the minimum deposit required on an average house to as little as £4000.”

SOURCE: Property Industry Eye | JULY 1, 2022 | MARC DA SILVA