The mortgage indemnity scheme originally intended for first-time buyers is to be extended to all UK buyers of new homes at up to £500,000.
Housing minister Grant Shapps has renamed the scheme New Buy Guarantee, and it is to be launched officially in March.
The NewBuy Guarantee scheme is welcome news for aspiring home owners, significantly reducing the deposit needed to buy their own home by around 75%.
On a home worth £120,000, buyers would only need a deposit of around £6,000 rather than as much as £24,000. In this case the £18,000 reduction could mean the equivalent of around three years of hard saving for a couple, both earning the average UK wage.
The Scheme mirrors the previous Home Buy Direct scheme but the equity share provided under New Buy is a combination of Government and House builder assistance. The scheme typically will offer successful applicants an equity loan as a deposit of up to 20% of the value of a new build property (maximum value £280,000). This deposit will be funded by the Government (10%) and House builder (10%).
You may still need to have 5% of your own in some instances to use the more mainstream lenders (High street names) as they will lend up to 75% of the purchase price, but it very much depends on the mortgage products available at the time.
It is perhaps a pity that the scheme could not be widened to existing housing as we believe this new initiative from the Government could help those disadvantaged by tougher lending rules realise their dream of moving up the property ladder.
For those who perhaps did not wish to do this scheme , we are currently able to offer 95% on new build properties which is only open to a very limited number of brokers of which , I am pleased to say , we are one.
As always thanks for your attention.
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