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£150k for Lloyds to cut aid to buy equity loan
The Lloyds Banking Group, the UK's largest mortgages financier, has lowered the amount it will loan under the Help to Buy Equity Loan facility to £150,000 from £500,000. Decreased threshold is below the £155,975 median needed by those who have purchased new buildings through the programme during the first 15 month of use.
The group said, however, that the "majority of SE [joint equity] and SO[joint ownership] requests we are receiving are below £150,000". Help to Buy Schema Loan allows those with a 5% investment to buy new buildings with the "help" of a 20% equity loan from the federal goverment - which means they need a 75% mortgages from a borrower, not a 95% mortgag.
"Our split equity and split equity loans have been set to a temporary limit of £150,000. It is a cautious, short-term shift that mirrors the fact that we currently have a 50% stake in the business and another move to concentrate our activities on helping first-time purchasers who have little opportunity to get on the ladder. 4.
Anderson Harris, Moneywise said: "Whilst Help to Buy has proved to be a favourite, this move by Lloyds indicates that creditors are still shying away from too much involvement in the high loan-to-value value area. "Lloyds is looking forward to a normal adaptation through the restraint and offer of a more moderate credit limit before possibly returning to the markets, although this is not guaranteed."
He added, however: "The move means less selection for first-time purchasers, especially those who buy in the Southeast, where real estate valuations are so much higher." Throughout the Group, Lloyds currently has a number of first-time purchasers who help to buy loans. Under the Equity Loan Plan he has a two year fixation at 3.94% with no charge and under the Mortage Protection Plan he has two two year fixations at 5.19% with a charge of 995 and 5.59% with a charge of 0 for 5% equity investors.
Beyond the programme, Lloyds Bank is providing a pre-installed MasterCard gift voucher of up to 700 until 6 October 2014 for freshmen with much larger deposit amounts between 25 and 40% cash back. Discount is available to those who purchase the two-year Initial Loan-to-Value (LTV) fix at 0 to 60% at 2.44% with a 995 charge or the 60 to 75% LTV at 2.84% with a 995 charge.