Halifax halves deposit needed for new build houses

Halifax: Based on the UK’s average house price of £289,099 ($350,340), the minimum deposit needed could now be as low as £4,000. Photo: Press Association

Halifax has lowered the deposit needed for new build houses, with the minimum amount required to secure a mortgage falling from 10% to 5% from 1 July.

The UK’s largest lender said that putting a sufficient deposit together was often the biggest hurdle for first time buyers, and that the move would make things significantly easier for many.

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Based on the UK’s average house price of £289,099 ($350,340), the minimum deposit needed could now be as low as £4,000.

“Bringing the maximum loan-to-value (LTV) in line with existing properties also has the advantage of making greener homes more attractive and attainable for first time buyers”, the lender said.

Due to the higher standards required of homes currently being built, since 2012, their average EPC 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.

Halifax has 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.

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Shared ownership is also an increasingly common choice for many 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.

The bank confirmed on Wednesday that it will now accept a 5% deposit on both new build flats and houses in shared ownership schemes run by housing associations.

Watch: UK property: What is shared ownership?

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.

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“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,” Andrew Asaam, mortgage director, at Halifax, said.

“This also underlines our confidence in the new build market and our support for the UK construction industry. We have worked closely with the industry and listened to their needs to develop these changes.

“Just as importantly, supporting new build homes supports the drive to net zero by making warmer, greener homes more accessible and attainable for potentially thousands of new buyers.”

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