Nationwide Building Society, the largest building society in the world and a financial services giant, declared a 95 percent mortgage borrowing rate for house buyers in the U.K.
Nationwide is calling its scheme "the Save to Buy" scheme, where a 95 percent mortgage loan on the desired property is granted, provided the borrower contributes toward regular savings for the mortgage. The borrower will have to open a "Save to Buy" account and deposit 5 percent of the borrowed sum or put £50 ($66) per month in the account for a mandatory six-month period, reports the Guardian.
The scheme has taken off well, especially for first time buyers. Around 25,000 debutante home purchasers have opened the Save to Buy account. In addition to the extensive mortgage rate, from Jan. 4, people who have adopted the scheme can choose to enter into a tax exempted Save to Buy account. The account generates an interest of 2 percent per annum on balance up to £20,000, reports Allvoices.
There is also a £1,000 ($1,323) cash back facility on maintaining a minimum balance of £10,000 ($13,239). Lesser cash back facilities are available on lower minimum balances.
Financial experts have expressed their delight at the extension rate. They believed that the extension was a more practical way of reaching out to distressed house buyers.
"The cost of moving, in particular paying stamp duty can make it very difficult to get together the necessary funds when the high cost of living makes saving tricky," Mark Harris, CEO of SPF Private Clients, a mortgage brokering firm, told The Guardian.
Nationwide was the first institution to offer free cash and electronic transactions all over the world with its VISA cards.
Real estate markets in the U.K. have taken a blow due to the elongated recession period. However, with such schemes and other perks, the face of the housing industry in the country could get a makeover in the new year.
