{"id":4870,"date":"2022-04-03T10:20:07","date_gmt":"2022-04-03T10:20:07","guid":{"rendered":"http:\/\/127.0.0.1\/wordpress117\/loans\/4870.html"},"modified":"2022-04-03T10:20:07","modified_gmt":"2022-04-03T10:20:07","slug":"are-lifetime-isa-mortgages-a-good-deal-for-first-time-buyers","status":"publish","type":"post","link":"https:\/\/tdafinance.com\/loans\/4870.html","title":{"rendered":"Are lifetime Isa mortgages a good deal for first-time buyers?"},"content":{"rendered":"

<\/p>\n

Skipton Building Society has released nine new mortgage deals for first-time buyers, but there’s a catch – you must also hold a Skipton lifetime Isa to become eligible.<\/strong><\/p>\n

More than 120,000 people currently hold an eternity Isa with Skipton, and it is only these customers who'd be able to make an application for this new mortgage range.<\/p>\n

There are 85%, 90% and 95% LTV products for two-year, three-year and five-year fixed rates.<\/p>\n

Here, we take particular notice in the deals to see whether first-time buyers saving with a lifetime Isa can definitely benefit, and how these products compare to the rest of the market.<\/p>\n

 <\/p>\n

How do Skipton lifetime Isa mortgages compare?<\/h2>\n

Two-year fixed-rate deals<\/h3>\n

Comparing Skipton’s 90% mortgage to the rest of the market, we found that HSBC's Two year Fixed Standard mortgage at 90% LTV offers the lowest initial rate of just one.79% for 25 months, reverting to 4.19% (APRC 3.9%). The deal is available for first-time buyers and remortgages and it has a lb999 booking fee.<\/p>\n

While Skipton offers lb500 cash back and zero fees, you'd still end up paying less with HSBC.<\/p>\n

As for 95% LTV, the lowest initial rate is provided by Loughborough Building Society. Only accessible in Britain, its 2.79% initial rate reverts to five.34%, and there is a completion fee of lb999 (APRC 5.1%).<\/p>\n

While Skipton's initial rate for the two-year 95% LTV mortgage is higher, taking Loughborough's fees and higher SVR into consideration means Skipton offers the cheaper deal over the course of the mortgage.<\/p>\n

The table below shows the rates for the Skipton two-year lifetime Isa mortgages.<\/p>\n\n\n\n\n\n
Product<\/td>\nLTV<\/td>\nInitial rate<\/td>\nSVR<\/td>\nAPRC<\/td>\nFees<\/td>\nCash back<\/td>\n<\/tr>\n
2 Year Fixed Rate Mortgage No Fee for Purchase<\/td>\n90%<\/td>\n2.46%<\/td>\n4.99%<\/td>\n4.7%<\/td>\nlb0; free standard valuation<\/td>\nlb500 on completion<\/td>\n<\/tr>\n
2 Year Fixed Rate Mortgage Free for Purchase<\/td>\n95%<\/td>\n3.53%<\/td>\n4.99%<\/td>\n4.9%<\/td>\nlb0; free standard valuation<\/td>\nlb500 on completion<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Three-year fixed-rate deals<\/h3>\n

For a three-year fixed interest rate mortgage at 90%, HSBC's initial rate of two.14% for 37 months, reverting to 4.19%, with a booking fee of lb999, has a 3.8% APRC.<\/p>\n

Skipton offers a generous lb1,000 cash back on completion and no fees, but you will be paying less with HSBC for the similar term and LTV.<\/p>\n

At 95% LTV, Family Building Society's Family Mortgage has a 2.89% initial rate, which reverts to five.04%. You will find completion fees of lb599, and also the APRC works out as 4.7%.<\/p>\n

Due to the initial rate being so low, this beats the Skipton 95% product for the similar term, even though you will find fees to pay for with no cashback.<\/p>\n

While there's only 0.1% improvement in the APRC, within the whole mortgage term that could make a big difference to how much you're repaying.<\/p>\n\n\n\n\n\n
Product<\/td>\nLTV<\/td>\nInitial rate<\/td>\nSVR<\/td>\nAPRC<\/td>\nFees<\/td>\nCash back<\/td>\n<\/tr>\n
3 Year Fixed Rate Mortgage No Fee for Purchase<\/td>\n90%<\/td>\n2.89%<\/td>\n4.99%<\/td>\n4.6%<\/td>\nlb0; free standard valuation<\/td>\nlb1,000 on completion<\/td>\n<\/tr>\n
3 Year Fixed Rate Mortgage No Fee for Purchase<\/td>\n95%<\/td>\n3.69%<\/td>\n4.99%<\/td>\n4.8%<\/td>\nlb0; free standard valuation<\/td>\nlb1,000 on completion<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Five-year fixed-rate deals<\/h3>\n

At 90% LTV, First Direct's Standard Fixed Repayment mortgage provides a fixed five-year mortgage by having an initial rate of 2.25%, which reverts to 4.19%. There is a lb490 booking fee, and also the APRC is 3.3%.<\/p>\n

This mortgage undercuts the Skipton five-year mortgage, though it doesn't offer cash return there are fees to pay for.<\/p>\n

The cheapest five-year 95% LTV deal originates from Family Building Society, with a 2.99% initial rate that reverts to 5.04%. There's a completion fee of lb599, it's only available in Britain, and the APRC comes out at 4.7%.<\/p>\n

The APRC is slightly higher than the Skipton mortgage offer for the same term and LTV, so even though the initial rate is cheaper with Family Building Society, it may be worth opting for the cashback offer and lower APRC with Skipton.<\/p>\n\n\n\n\n\n
Product<\/td>\nLTV<\/td>\nInitial rate<\/td>\nSVR<\/td>\nAPRC<\/td>\nFees<\/td>\nCash back<\/td>\n<\/tr>\n
5 Year Fixed Rate Mortgage Free for Purchase<\/td>\n90%<\/td>\n2.79%<\/td>\n4.99%<\/td>\n4.3%<\/td>\nlb0; free standard valuation<\/td>\nlb1,000 on completion<\/td>\n<\/tr>\n
5 Year Fixed interest rate Mortgage No Fee for Purchase<\/td>\n95%<\/td>\n3.76%<\/td>\n4.99%<\/td>\n4.6%<\/td>\nlb0; free standard valuation<\/td>\nlb1,000 on completion<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/p>\n

Should I recieve a Skipton lifetime Isa mortgage?<\/h2>\n

Check the terms<\/h3>\n

There are several caveats to note using the Skipton lifetime Isa mortgage options.<\/p>\n

Firstly, the rates incorporate a 0.25% discount applied whenever you pay via direct debit. Most mortgage brokers need you to fill out an immediate debit mandate on application, so it paying this way will avoid considerably higher loan rates.<\/p>\n

Secondly, if you're thinking of taking out a five-year deal, be aware that you will find early repayment charges, which you'll need to pay if you wish to move house and should not port the mortgage.<\/p>\n

With the Skipton lifetime Isa mortgages, you are able to overpay as much as 10% from the original loan until 31 January 2024; above that, there are early repayment charges of 5% until 31 January 2022, 5% until 31 January 2022, 4% until 31 January 2022, 3% until 31 January 2023, 2% until 31 January 2024.<\/p>\n

It's also important to note these mortgage deals are only available through intermediaries, so you'll have to apply via a large financial company.<\/p>\n

Consider the cash back<\/h3>\n

The proven fact that there aren't any fees and a free standard valuation might be popular with first-time buyers, who are often strapped for cash after paying a lump sum for their deposit.<\/p>\n

For this reason, the possibilities of cash return can also seem appealing.<\/p>\n

As you only get the payment from Skipton on completion, you will not be able to utilize it towards your deposit, but it may help pay for such things as removal costs, new furniture or small remodels once you've moved in.<\/p>\n

As an additional benefit, Skipton pays extra cash to lifetime Isa holders who will continue to take out a Skipton mortgage for his or her first home. This cash return offer isn’t advertised on Skipton’s website, but the building society confirmed that? Money the offer exists.<\/p>\n

When comparing mortgages, you should think about whether things like cash return perks outweigh fees, initial rates and the APRC.<\/p>\n

Compare customer service<\/h3>\n

Each year Which? surveys a large number of mortgage holders regarding their experiences using their providers. In our 2022 mortgage satisfaction survey Skipton earned an impressive customer score of 73%, leading us to name it a Which? Recommended Provider.<\/p>\n

You can find out more in our Skipton Building Society mortgages review or learn how virtually all of the lenders performed within our full help guide to the very best and worst mortgage lenders.<\/p>\n

How much can you borrow?<\/h3>\n

First-time buyer mortgage lending is on the up, suggesting that affordability is improving.<\/p>\n

While we discovered that mortgages were granted in an average multiple of 3.69 times the buyer’s annual salary, the Skipton lifetime Isa mortgages potentially provide a salary multiple of up to 4.75 times.<\/p>\n

Whether you can actually borrow this much depends in your individual financial circumstances, Skipton told us.<\/p>\n

Are 85% LTV products ideal for first-time buyers?<\/h2>\n

Skipton also offers 85% LTV mortgages for each of their two-year, three-year and five-year terms, with initial rates of 2.30%, 2.64% and a pair of.69% respectively.<\/p>\n

We haven’t included these within our detailed analysis as it’s questionable how applicable an 85% LTV would be to the majority of first-time buyers.<\/p>\n

All of the alternative top deals we found for any 90% LTV mortgage beat these rates, meaning you’ll have potentially in the bank an additional 5% deposit without getting a preferential rate.<\/p>\n

First-time buyers should always try to develop as big a first deposit as possible. But because these loans are to supposedly help lifetime Isa holders – a savings creation that was made to assist those struggling to jump on the housing ladder – the number of people who will in fact be able to raise a 15% deposit is likely to be limited.<\/p>\n

Lifetime Isas only allow a maximum of lb5,000 (including the government bonus) to become saved every year. So, if you are buying a property worth lb200,000, it will take at least three years in order to save up for any 15% deposit. The lifetime Isa product only has existed for about 1 . 5 years, as it launched in April 2022.<\/p>\n

So, as the rates for 85% LTVs might look good, it’s questionable whether lots of people will be able to profit from them.<\/p>\n

Help to purchase Isa mortgages<\/h2>\n

Help to Buy Isa holders could be fortunate, too, as Yorkshire Building Society has also launched a range of mortgages specially prepared for individuals who save into any Assistance to Buy Isa with any provider.<\/p>\n

There's a 90% and 95% product for two-year and five-year fixed rates, all of which offer lb150 cash back and have no product fees.<\/p>\n

Fixing for two years means you can aquire a 90% LTV product by having an initial rate of two.26%, and an APRC of 4.4%.<\/p>\n

At a 95% LTV, the initial rates are 3.27%, with the same cash return, along with a slightly higher APRC of 4.5%.<\/p>\n

Fixing for 5 years having a 90% LTV means a preliminary rate of 2.79%, and 4.2% APRC. At 95% LTV, there’s a 3.89% initial rate and 4.6% APRC.<\/p>\n

These rates are slightly greater than the mortgages offered on the Skipton lifetime Isa mortgages, with less cash back.<\/p>\n

<\/p>\n

What is a lifetime Isa?<\/h2>\n

A lifetime Isa is a tax-free savings or investments account that can be opened by anyone aged between 18-39.<\/p>\n

The government adds a 25% bonus to whatever you save in to the account – as much as lb1,000 a year, as possible deposit a maximum of lb4,000 annually. You receive paid this bonus monthly.<\/p>\n

The money you save right into a lifetime Isa can only be used either towards your first home in order to spend on whatever you like in retirement whenever you get to the chronilogical age of 60. You can also access the money if you're identified as having a terminal illness.<\/p>\n

Withdrawing money for any other reason will mean you're charged a withdrawal penalty of 25% around the money you take out – this equates to losing more than just the federal government bonus, as you will also lose out on any growth on the money.<\/p>\n

If you utilize a lifetime Isa towards your first home, the property can cost no more than lb450,000 anywhere in the UK, and you should have held the account for at least Twelve months before you make use of the money towards the first home.<\/p>\n

There are presently 12 lifetime Isa providers.<\/p>\n

<\/p>\n

Get personalised advice on your mortgage options<\/h2>\n

If you’re a first-time buyer and want help finding and arranging the very best mortgage for the circumstances, a whole-of-market broker can give you expert consultancy.<\/p>\n","protected":false},"excerpt":{"rendered":"

Skipton Building Society has released nine new mortgage deals for first-time buyers, but there’s a catch – you must also hold a Skipton lifetime Isa to become eligible. More than 120,000 people currently hold an eternity Isa with Skipton, and it is only these customers who'd be able to make an application for this new<\/p>\n","protected":false},"author":1,"featured_media":4869,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32],"_links":{"self":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts\/4870"}],"collection":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/comments?post=4870"}],"version-history":[{"count":0,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts\/4870\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/media\/4869"}],"wp:attachment":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/media?parent=4870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/categories?post=4870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/tags?post=4870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}