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Teachers BS launches new Help to Buy product after being forced to pull old deal

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Bawa: ‘We would have preferred to offer 80% LTV’

Teachers Building Society will relaunch its Help to Buy product later this week, two weeks after a Government agency told the lender to pull its previous product because its LTV ratio was too high.

The new product, which launches on Friday, will be a 2.89 per cent three-year discount mortgage available up to 75 per cent LTV.

It will have no arrangement fee but will have a £99 application fee, however this, along with the valuation fee, will be refunded on completion.

At the end of May, Teachers pulled its previous Help to Buy product, a 5.99 per cent three-year variable rate available up to 80 per cent LTV.

When the Government announced it was launching its Help to Buy scheme in March it also revealed that its FirstBuy scheme, in which the Government and housebuilder would offer a 10 per cent equity loan each, would end in April.

Teachers had offered the product through FirstBuy so when the scheme ended in April it simply rebranded its FirstBuy product as a Help to Buy product.

But the Homes and Communities Agency contacted Teachers to request that the product be discontinued since FirstBuy had come to an end and the LTV ratio was too high to count as a Help to Buy product.

Under Help to Buy borrowers have to stump up a 5 per cent deposit, but the Government then provides a 20 per cent equity loan, so borrowers then have to secure a 75 per cent LTV mortgage.

However, under FirstBuy while the vast majority of lenders required a 5 per cent deposit under FirstBuy, the HCA allowed lenders to offer a deposit-free option (80 per cent LTV mortgage plus the 20 per cent equity loan) to borrowers.

At the end of May, Teachers Building Society chief executive James Bawa told Money Marketing’s sister title Mortgage Strategy: “It would have been our preference to offer 80 per cent LTV Help to Buy products to exceptionally good risks, however we understand from the Homes and Communities Agency that this is not an option available to us.”

The Government will launch the mortgage indemnity scheme element of Help to Buy in January. It will have the potential to support up to £130bn of new mortgage lending over three years.

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