Nationwide completes first ever Mi New Home mortgage
The Mi New Home scheme allows clients to buy a home with a lower deposit than the lender would normally need – in some instances up to 90 to 95% LTV so long as the mortgage lender’s affordability requirements are met.
James Chidgey, senior manager of group intermediary sales at Nationwide, said: “Nationwide is delighted to have completed the first ever Mi New Home mortgage.
“It reflects our commitment to helping buyers with low deposits to purchase a new-build property.
“At Nationwide we are continuing to add more developers onto our growing panel of Mi New Home builders to give maximum coverage for purchasers.”
Under the Mi New Home scheme the property has to be a new-build in Scotland and priced £250,000 or less.
It also has to be a standard purchase (not shared equity or shared ownership) and has to be intended to be used as the clients main home.
It is only available to UK citizens or those with indefinite leave to remain in the UK and the deposit has to be saved without any help from a local or public authority.
Buying a property with a mortgage under the Mi New Home scheme is likely to be more suitable for people who expect to stay in the property for a number of years rather than those who plan to move again within a short period.
Some new-build properties include an extra premium on the sale price that can reduce as soon as someone moves into the property.
If house prices fall, borrowers may not have enough money from selling the property to repay the mortgage.
A fact sheet from the Council of Mortgage Lenders warns: “If the amount you owe under your mortgage is greater than the value of your home, this is called ‘negative equity’ and could make it difficult to move or remortgage unless you can meet the shortfall from savings or other sources. However, this is a risk of high loan-to-value borrowing (where you borrow a large percentage of the value of the property), not of the Mi New Home scheme itself.”