40% Deposit Interest Free
Londoners are to receive a 40% Deposit Interest free from the Government. This is according to an announcement in the Autumn Statement for Chancellor George Osborne.
That was a major rabbit that he pulled out of his hat, completely out of the blue.
This is under the Help to Buy scheme.
Help to Buy Scheme
The Help to Buy scheme has worked very well outside London but not very well in London.
The Government offered 20% deposits, interest free, to those wanting to get on the property ladder.
However, this was not much use in London where property prices have soared out of all recognition.
A nice flat in a decent area could cost you close to a million pounds.
So, offering them a 20% deposit wasn’t going to do the trick.
IT Contractor Mortgages
Indeed, even IT Contractors, who are pretty well paid, would struggle to buy a first home in London.
A contractor who earned £400 a day would be able to borrow close to half a million using specialist contractor mortgage brokers.
However, he, or she would be left scratching around, even at that, for a home in a decent area.
So, now contractors in London, who wish to purchase a new home, will qualify for this 40% deposit.
5% Deposit for UK Contractors
With this new initiative, or latest version fo the Help to Buy scheme, contractors would need to stump up jus a 5% deposit and the Government will stump up another 40%.
This will leave lenders just needing to stump up a further 55%.
Because the lenders are loaning just 55% it means that they are likely to loan money at lower rates than a lender asked to stump up 90% or 95%.
Nationwide Mortgages Just for Contractors
It’s expected that the Nationwide Building Society are going to want to have a piece of this action.
One specialist contractor mortgage brokers have a current deal with them to get contractors mortgages at great rates.
A high street building society, or bank, would ask contractor to produce three years worth of accounts to get a mortgage offer.
They would base that mortgage offer on a multiple of their Director’s salary.
That’s not much use.
This specialist contractor mortgage broker has a deal with the Nationwide specially for them that provides mortgage offers to contractors just on production of their contract.
Mortgage Offer based on Daily Rate
Furthermore, they will base that mortgage offer on their daily rate annualised.
So, if their daily rate was £400 a day, the offer would be likely to be £400 x 5 x 48 (weeks) x 4.
Therefore, it is expected that Nationwide will give a new deal to London contractors with a rate as low as 1.59% fixed for 2 years with a £999 arrangement fee.
For more details on this , or to apply, all you need to do is click on Contractor Mortgage Application and fill in the form there.