Breaking Down the New 99% Mortgage Option for First-Time Buyers

For those aspiring to step onto the property ladder, a glimmer of hope emerges with the unveiling of a new mortgage option: a 99% mortgage, designed to ease the burden on first-time buyers. This innovative offering, spearheaded by Yorkshire Building Society in collaboration with Accord Mortgages, presents a promising avenue for individuals across England, Scotland, and Wales with a modest £5,000 deposit to embark on their homeownership journey. With the potential to secure a property valued up to £500,000, the prospect of homeownership becomes within reach with just a 1% deposit.

However, let’s delve into the specifics. This enticing mortgage product necessitates a commitment to a five-year fixed rate, currently set at 5.99%, slightly higher than prevailing market rates. Yet, it offers a silver lining as it waives any product fees, thereby mitigating some upfront costs for buyers. Calculated over a 25-year term, a typical mortgage of £200,000 for a first-time buyer would translate to monthly payments of approximately £1,170.

Yet, it’s imperative to note the nuances. This mortgage option comes with certain caveats: it excludes purchases of new-build properties or flats, mandates a thorough assessment of affordability and creditworthiness during the application process, and imposes a maximum borrower age limit of 70 at the conclusion of the mortgage term.

While this initiative marks a significant stride towards homeownership, it’s not the first of its kind. Last year, Skipton Building Society made waves with its introduction of a 100% mortgage tailored for renters aspiring to own a home, allowing them to bypass the need for a down payment entirely. Similarly, Barclays' Springboard mortgage offers an alternative route by requiring assistance from friends or family, who contribute 10% of the deposit as security, held in an interest-bearing account for five years before being refunded.

Ben Merrit, Yorkshire Building Society’s director of mortgages, underscores the significance of this initiative, citing research that identifies £5,000 as the optimal deposit amount, potentially expediting the path to mortgage eligibility. He emphasises the importance of leveling the playing field, particularly for those lacking familial financial support.

Nevertheless, a note of caution is sounded by Rachel Springall, a finance expert at While acknowledging the appeal of this new offering, she advises borrowers to consider their long-term financial strategy. Overpaying the mortgage whenever feasible is recommended to build equity and transition to lower loan-to-value brackets, unlocking access to more favorable refinancing deals.

In light of these considerations, it’s advisable for prospective buyers to seek personalised advice from mortgage and financial advisors, who can offer tailored guidance to navigate the complexities of homeownership - Contact us today to speak to one of our independent mortgage advisors.

As the allure of homeownership beckons, it’s essential for aspiring buyers to stay informed and proactive. Early registration of interest and vigilance in monitoring property listings can provide a competitive edge in securing the ideal home. Keep abreast of updates through our social media channels on Facebook and Instagram for exclusive previews of upcoming properties.

Contact us today to embark on your journey to owning your first home.

Posted on: 28 March 2024