Yorkshire Building Society launches new Help to Buy ISA mortgages

Yorkshire Building Society has launched a range of new two and five-year fixed rate mortgage deals aimed at first-time buyers with a Help to Buy ISA, who are about to get onto the property ladder.

Help to Buy ISAs were introduced by the government nearly three years ago as a way for first-time buyers to save a deposit to buy their first home. Savers can deposit a lump sum of up to £1,200 in the first month of opening the account and up to £200 each month thereafter, up to a maximum balance of £12,000. The government adds another 25% to any contributions made, paying out a maximum overall bonus of £3,000.

The Help to Buy ISA doesn’t have to be held with the Yorkshire for savers to qualify for the new mortgages, it can be held with any savings provider.

“We understand how tough it can be for first-time buyers to take that initial step on the property ladder and we’re constantly looking at ways we can help them to own their own home,” said Janice Barber, mortgage manager at Yorkshire Building Society. “Our latest First-Time Buyers Report showed almost half of those saving for their first property are doing so with a Help to Buy ISA. We’ve launched this exclusive new range of mortgages to directly appeal to this group of prospective borrowers.”

The new mortgage rates are slightly better than those already on offer from Yorkshire, and the deals are likely to appeal to those with small deposits. Although no cashback is offered, there is a low £495 arrangement fee and a free valuation.

Other lenders linking mortgages to savings

Some lenders offer mortgages linked to their own savings products.

For example, you’ll only be eligible for Nationwide Building Society’s Save to Buy mortgages if you’re in at least the third month of holding a Help to Buy ISA with them. Save to Buy mortgages enable you to put down a deposit of just 5% of the property value. If your savings balance is less than £5,000, you’ll be eligible for £500 cashback when you take out a Save to Buy mortgage, rising to £1,000 if your saving balance is more than £5,000.

Skipton Building Society provides £250 cashback to homebuyers who open a Lifetime ISA and then go on to take out a mortgage with them. The Lifetime ISA is another savings scheme designed to help first-time buyers build up a deposit, or to save for retirement, or both. You can save up to £4,000 into a LISA each year, and you’ll receive a government top up of 25% on any contributions you make. If you have both a Lifetime and a Help to Buy ISA, you can only use the government bonus from one of these accounts to purchase a property.

It’s not surprising to see lenders offering incentives to those using Help to Buy ISAs but it remains important to consider what else is available in the wider market to make sure they are the best option at the time.