The 95% LTV mortgage, which is initially being marketed via Barratt Homes, combines an Aldermore 80% LTV two-year fixed rate mortgage with a 15% LTV unsecured loan provided by Hitachi Capital to cover part of the required deposit.
The two-year fix has a rate of 5.48%, with a completion fee of £999 and a maximum loan size of £250,000.
The unsecured loan has a fixed rate of 5.90% for 12 years, a maximum size of £50,000 and allows overpayments at any time.
The 95% LTV mortgage will only be eligible on new build properties in England and Wales.
Charles Haresnape, managing director of Aldermore Residential Mortgages, claimed the biggest issue holding back buyers is their inability to raise a large deposit.
He said: “Aldermore’s recently launched Family Guarantee Mortgage provides an option for borrowers seeking a 100% LTV loan and this scheme gives those who can raise a 5% cash deposit yet another route to home ownership.
“We are providing would-be homeowners with choices, in a market where the options for those with less than a 25% deposit are few and far between.”
Gerald Grimes, managing director at Hitachi Capital UK, highlighted that would-be home buyers have become “disheartened with the current housing market” because of the large deposits demanded by many lenders.
He said: “Initially this will be with Barratt Homes but we will be rolling it out through other house builders, such as Linden Homes, part of Galliford Try plc and Keepmoat Homes.
“If the housing market is to fully recover, the issue of deposits needs to be tackled head on. In light of this, we’re delighted to be working with Barratt Homes as well as Aldermore to bring a pioneering product to help stimulate the UK property market.”
