The property market in Basildon, like many areas across the UK, presents unique challenges and opportunities for buyers. Securing a mortgage is often the most significant hurdle, particularly for those with smaller deposits. Santander's new 98% loan to value (LTV) mortgage, launched yesterday, aims to address this by requiring only a 2% deposit from eligible applicants.

Understanding the 98% Mortgage

Traditionally, a 5% or 10% deposit has been the minimum requirement for many mortgage products. A 98% mortgage, therefore, represents a substantial shift, making homeownership more accessible to individuals who have struggled to save a larger sum. This product is designed for first time buyers and those looking to move home, provided they meet specific criteria, including a good credit history and affordability checks.

It is important to note that while the deposit requirement is lower, the overall cost of borrowing may be higher. Lenders often price higher LTV products with slightly increased interest rates due to the perceived higher risk. Buyers should carefully consider the total repayment amount over the mortgage term.

Impact on Basildon's Property Market

Basildon's property market is characterised by a diverse range of housing, from modern apartments to family homes, appealing to various buyer demographics. The introduction of a 98% mortgage could have several key impacts:

• Increased Accessibility: For many in Basildon, the barrier to entry has been the deposit. This new product could open doors for individuals and families who previously felt homeownership was out of reach, potentially stimulating demand in the local market.
• First Time Buyer Boost: Basildon is a popular area for first time buyers, thanks to its commuter links and relatively affordable property prices compared to London. A lower deposit requirement could significantly empower this demographic, leading to more transactions.
• Potential for Increased Competition: If more buyers enter the market due to reduced deposit requirements, it could lead to increased competition for available properties. This might, in turn, influence property values, particularly in popular areas or for specific property types.
• Affordability Remains Key: While the deposit is smaller, lenders will still conduct rigorous affordability assessments. Buyers in Basildon will need to demonstrate a stable income and the ability to manage monthly repayments, especially if interest rates are higher for a 98% LTV product.

Considerations for Basildon Buyers

If you are considering a 98% mortgage in Basildon, here are some points to reflect upon:

• Financial Planning: Work with a mortgage adviser to understand the full financial implications, including interest rates, fees, and monthly repayments. Ensure the mortgage is sustainable for your long term financial situation.
• Property Search: Be prepared for potentially increased competition. Having your finances in order and being 'mortgage ready' can give you an advantage when making an offer.
• Market Knowledge: Stay informed about local property trends in Basildon. An experienced estate agent can provide valuable insights into current demand and property values.
• Credit Score: A strong credit history will be crucial for eligibility. Take steps to improve your credit score if necessary before applying.

Santander's 98% mortgage represents a notable development for buyers. While it offers a clear advantage in reducing the initial deposit burden, prospective homeowners in Basildon should approach it with careful consideration and professional advice to ensure it aligns with their financial goals and circumstances. If you would like any further assistance or information, please do not hesitate to get in touch with us.