Broker battle for Help to Buy mortgages heats up

Prospective property owners across the UK have been given a significant boost this week as a number of new and attractive help to buy mortgages have been placed on the market for them to choose from.
The new deals are part of a price war that is emerging between some of the countryís largest mortgage providers as the final phase of the Help to Buy initiative comes into play.
Barclays top the list of new offerings with its 0% fee and three year, 5.35% fixed rate offering representing great value for all young prospective homeowners out there. For those who wish to fix in for longer, Barclays also have a 5.49%, five year deal that is set to be released tomorrow, and will enable borrowers to attain up to 95% of their propertyís value due to the bank being registered on the governmentís Help to Buy initiative. 
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The second stage has had a slow start, but as more lenders come on board, competition is driving a price war and pushing rates down. Lenders are offering more choice and improving the rates on offer, although they remain slightly higher than those for buyers with a bigger deposit.”
The second phase of the governmentís flagship housing scheme was enacted back in October and has sought to revitalise a property landscape that has been stagnant since the start of the economic downturn back in 2008.
The scheme entails the government guaranteeing 15% of high loan to value mortgages given out to borrowers in return for banks lowering deposit requirements to 5% and distributing mortgages out of up to 95% of a houses worth.
And its popularity and scale has increased dramatically in the past 3 months, with the initial 42 products being offered by banks expanding to 145 across a multitude of different financial organisations. 
Another great Help to Buy deal is offered by Virgin Money, who at 5.39% for a three year fixed rate deal represent great value as well for anyone who wants to shield themselves from potential interest rate rises in the future. Similarly to Barclays offering there is no fee charged for acquiring the mortgage whilst a number of cash back incentives make it potentially more desirable that Barclays latest deal. 
Rachel Springall from Moneyfacts said: “At 5.49%, Barclays’ fee-free five-year fixed deal lacks additional incentives but appears to be priced to match NatWest, Santander and Virgin Money. However, the Santander deal boasts a £250 cash rebate and free valuations and Virgin Money offers a £300 rebate.”
Consumers may want to consider the two year fixed rate deal before offered by HSBC at the moment, which at 4.79% is also good value, though the £99 surcharge and £10,000 minimum deposit may detract those who are already 
struggling to obtain enough money to acquire am mortgage. 
Despite the great value of Barclays, HSBC and Virgin Moneyís Help to Buy mortgages, David Hollingworth of London & Country has identified that there are financially superior and safer deals out there and has warned prospective homeowners of the potential dangers of acquiring a high loan to value mortgage at this time. 
Mr Hollingworth said :”They should consider the wider market, as it’s irrelevant whether the product is guarantee-backed or not ñ it comes down to whether they fit the criteria and if it’s suitable for their circumstances.”
“Overall, Help to Buy has really helped open up a market that had been all but closed in recent years. Adding more competition should help improve the rates and hopefully allow others to develop products. Those that had supported the market throughout should also be able to carry on offering deals and perhaps improve rates further.”
There a number of attractive offerings on the market currently that like Help to Buy have low deposit requirements. West Brom building society currently has a 90% loan to value offering that allows borrowers to fix in for two years at 3.64%, representing excellent value. 
Similiarly Yorkshire building society offers a multitude of 95% loan to value mortgages with one particular 4.99%, zero fee, and three year deal particularly catching the eye. 
The question however is whether you actually need a 95% loan to value mortgage, because whilst it might seem financially beneficial and viable right now, it might be far more difficult to uphold payments on time moving forward in the future.
You should strenuously analyse your finances and see if you can contribute more from your savings when looking for a mortgage so you borrow less and end up paying less interest. 

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