As of the 18th of March, 2021, the Bank of Ireland is returning to their 95% LTV rate, helping first-time buyers and home movers buy a property with a minimum 5% deposit.
Available to self-employed and employed borrowers
Accessed exclusively through brokers
Deposit CAN be gifted
Bank of Ireland say they’ll be able to help many first-time buyers
Mortgage director at Bank of Ireland UK, George Higginson, commented: “The last year has seen unprecedented challenges in the market. Over this time we’ve consistently offered a full range of mortgages to help provide certainty for brokers and their end customers”
He went on to say, “By offering a 95% LTV mortgage product again, we’ll be able to help many first-time buyers, second steppers as well as the self-employed who are often overlooked by other lenders.”
Lenders had previously pulled products during the pandemic
2020 saw an extraordinary number of lenders pulling their low deposit mortgage products, leaving those with fluctuating income or income from the furlough scheme excluded from the market unless they had a substantial deposit and a very ‘clean’ credit history.
Some lenders pulled their products completely.
In fact, data from Moneyfacts shows there were just five products available at 95% LTV at the start of this month, compared to 391 at the start of March last year.
Additional research from the same group found that just a handful of lenders offered 5% mortgages throughout the pandemic and these usually had tight restrictions including requiring a guarantor or that they were only usually provided to joint applicants as opposed to single applicants with only one stream of income.
The good news is that lenders, as well as the Bank of Ireland and Accord Mortgages, will also be releasing details about their upcoming mortgage products with 5% deposits.
The government will also be backing 5% deposit mortgages for other lenders
Current homeowners and first-time buyers can also take advantage of the government’s mortgage guarantee scheme which could see lenders including Virgin Money, HSBC and Halifax offer similar deals, all of which will be likely “backed” by the UK government.
Understandably, a lot of potential borrowers won’t want to wait and will be eager to apply for a mortgage with such an affordable deposit requirement now rather than hold off until the government-backed mortgages come to the market.
For the borrower, the process of applying for either a government-backed mortgage or a non-government-backed mortgage will be very similar, though there will certainly be factors to weigh up when deciding which route to opt for.
Take advice from a mortgage broker before delving into the process; you’ll have to use a broker to access a mortgage via the Bank of Ireland anyway and that’s not a bad thing.
Brokers work on your behalf to negotiate affordable mortgage deals, so even if you don’t meet the eligibility criteria for this particular product with the BOI, your broker can help you find an alternative solution that is better suited to your circumstances.
How does a 95% mortgage with the Bank of Ireland work?
The mortgage is a five-year fixed rate of 4.05%
No product fee
Valuation fees must be paid within three days of the full application being submitted
Available across the whole of the UK
Deposit CAN be gifted
Maximum term 35 years
Borrow up to 4.49x your annual income
A minimum and maximum loan size of £150,000 and £500,000
New build properties are maxed to 85% LTV on houses and 80% LTV on flats
Cannot be used in conjunction with Forces Help to Buy deposit
Only available via a broker
Not available to existing Bank of Ireland customers who want to move home
The Bank of Ireland will even consider 50% variable income in some circumstances, (that’s income that is irregular and non-periodic).
They’ll look at either the last 12 month period or the last 3 months of your accounts, whichever is lower, to determine whether your income is sufficient enough to afford your mortgage.
BOI 95% LTV deal isn’t exclusive to first-time buyers
Accord Mortgages may have been the first lender to announce the return of a 5% deposit requirement mortgage, but you may remember from our recent article that their product is exclusive to first-time buyers only.
The Bank of Ireland’s new low deposit LTV mortgage is available to:
First-time buyers
Homemovers (that are new BOI customers)
Employed
Self-employed (though contractors are limited to max 90% LTV)
This is promising news for many self-employed who were previously excluded from many mortgage products due to their perceived unstable income which can present a risk to lenders.
Self-employed workers could get a low deposit mortgage - even with variable income
Banks and lenders usually prefer mortgage applicants to have a steady income that is fixed as this suggests a strong likelihood that the borrower can repay their loan over the duration of the agreement.
Self-employed workers can have income that goes up and down through the year, sometimes depending on the seasons or availability of work.
Lots of lenders can be hesitant about loaning large amounts to people who may face a loss or drop of income but the Bank of Ireland has widened their lending criteria to include self-employed borrowers too.
The new 5% deposit requirement offered to self-employed borrowers by the Bank of Ireland, could certainly be more achievable than alternative lenders whose criteria can demand a 15-20% deposit.
Here’s what you need to apply for a 95% mortgage with the Bank of Ireland
Passport or driver’s licence for identification
Last 3 month's bank statements required
Proof of any benefits or pensions received
Last 3 months payslips / self-employed tax returns
Utility bills
Check your credit report too. It can help to prepare you for any issues that could delay the process or stop you from successfully applying.
A Mortgage Hut broker can give you advice on how to check your credit score, saving you time while providing advice on how you can boost your credit score and improve your borrowing power.
If you’re keen to proceed and get onto the property ladder this year via a mortgage through the Bank of Ireland or the additional lenders offering similar terms in the near future, we’re here to help.
Call 02380 980304 or make an enquiry for a call-back.
023 8098 0304