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First Direct's 5% deposit mortgage - comment and expert advice

Journalist: Samantha Downes, Currently at the I (business editing some Sundays (freelance) and Mortgage Solutions

ended 27. April 2022

For The i. I'm looking for comment on the latest First Direct deal, and also I need to list the other providers (lenders) offering the same LTV/deposit deal.

  • Is this good for FTBs? 
  • Is the rate market-leading?

4 responses from the Newspage community

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Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
More lenders provide 5% deposit mortgages giving first-time buyers additional options when they have smaller deposits. We went through a long period where the lenders were not offering 5% deposit rates and it was tough for many first-time buyers. Nationwide provides 5.5 times salary income stretch mortgages to some first-time buyers. Sole applicants will need to earn £37,000 - while joint borrowers will need to earn £55,000. Self-employed buyers do not currently qualify and the scheme is only available on second home houses when buyers have a 5% deposit. First Direct's new deals are competitively priced and they have the added incentive of not having arrangement fees. The difference between First Direct's two and five-year fix 5% deposit rates is only 0.15%, so if you plan to stay in the property for a while, you may want to opt for the five year fix and get the additional payment security,
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Samantha Bickford
Mortgage and Equity Release Specialist at Mortgages with Clarity
"There are several lenders on the market offering 95% Loan to Value and 40 year terms, for example, Barclays offers the same 95% Loan to Value deal at 2.94%. While it is good for borrowers to have more choice, there needs to be a bigger point of difference to appeal to our younger generation for the new deals to be 'market leading'. Using a broker is more important than ever now, so finding a cheap online deal should not be the starting point for first-time buyers, that should be finding a reputable whole of market and independent mortgage broker."
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
"In a word, 'No' it isn't market-leading. Others are cheaper overall and even First Direct's owner, HSBC, has a lower rate for both 2 and 5 year fixed rates (as of 27/04/22), also with no fees. This is why anyone who needs a mortgage should go on Google, search for mortgage advice near them and contact whoever has the best reviews because they do all this grunt work for you. It's not rocket science."
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Paul Neal
Mortgages & Equity Release Advisor at First Choice Financial Services
This is a great deal if you have A*** Credit, decent income and know what you are doing. As First Direct are part of HSBC they are incredibly picky with who they will lend to, and as you have to go direct to them as a customer and not through a broker you need to know what you are doing to avoid a costly mistake. Most lenders are 3%+ with the exception of Clydsdale offering 2.95% its not a bad deal.