Key worker mortgages

The government is concerned that rising house prices will undermine investment in public services because nurses, teachers and other key workers will be priced out of the housing market.

The problem is particularly apparent in the South East and London area where the cost of a new home has left average earnings behind, meaning that people on lower incomes have a higher likelihood of moving away in order to buy a house. This causes problems, as an example, for schools in those areas as they cannot fill vacancies.

To combat these issues, the Government has launched a number of schemes to help reduce the costs of homes for key workers. A number of local authorities have imposed planning restrictions on developers where the developer has to set aside a certain amount of their new housing project for people on lower incomes.

Scottish Widows has launched a new mortgage for key workers as a viable alternative to the Government’s new Open Market Homebuy scheme.

Their Key Worker Mortgage allows key workers to buy their own home outright with a LTV of 102%; the aim is to help those who find it difficult to pay for a deposit.

Richard Clark, head of product development and marketing at Scottish Widows Bank, says: “We have launched this product to offer Key Workers an alternative to the existing Government scheme.  With the Government recently announcing that they will not be putting any new money into the Open Market Homebuy scheme, we believe that our product will offer a genuine solution for Key Workers, including the opportunity to own 100% of their property.”

Scottish Widows can offer buyers income multipliers of 5x salary for a single applicant and 5x + 1 or 4.5x joint salaries.

The mortgage is also available for key workers aged between 21 and 40 who wish to remortgage or upsize their existing property.

The key worker mortgage has rates for up to 5 years, with fixed rates, stepped fixed rates and a base rate tracker.