Yorkshire overhauls interest-free equity

Available for the first five years, the new product will launch on Monday 3 December and replace the existing 75/25 per cent product.
Alongside the interest-free element, borrowers will benefit from a more affordable loan and the facility to be able to put in a deposit that will be deducted from the Government loan.

The make-up of the new offering is 67.5 per cent conventional mortgage from the Society, a 15 per cent Equity loan provided by the Society, interest free for five years – 3 per cent thereafter, and a 17.5 per cent Equity Loan, interest free for the duration of the mortgage, provided by the Government through HomeBuy agents.

Two products will be offered, neither of which will charge a product fee.

The first is 6.79 per cent, fixed for five years, while offers Bank of England base rate + 1.49 per cent (currently equates to 7.24 per cent) for five years.

Andy Caton, corporate development director at Yorkshire Building Society said: “The 32.5 per cent total equity loan is an increase on the previous scheme, thereby increasing the customers’ buying power and reducing their costs.

"We have been delighted with the progress of OMHB so far and are firmly committed to offering potential buyers the best deal possible.

"Despite the increase in funding rates, we have been able to offer a product at a lower rate than the previous product and with no application fee. The five-year products provide stable monthly payments in those crucial early years of home ownership.”