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Mortgage deposit to be set at 5%

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A new scheme has been announced which could see first time buyers only needing to raise a 5 per cent deposit if they wanted to apply for a mortgage.

The Coalition has launched a new scheme which could potentially help 100,000 people by underwriting mortgages.

At the moment some banks ask for a 20 per cent deposit to buy home, this could significantly change the housing market with buyers only needing to pay a 5 per cent deposit.

With the current financial difficulties and the ongoing rise in the cost of living, the new scheme will be a stepping stone for first time buyers hoping to own their own home.

For many first time buyers finding the initial deposit can be challenging enough and it can also put their lives on hold because they want a house first before they get married or have children.

The costs to move house are high enough to think about with legal fees, moving fees and surveys, without the added pressure of a deposit.

Prime Minister, David Cameron has backed the new scheme hoping it will make owning a home a reality for more people, he said: “The housing market has got stuck, we are determined as a coalition Government to unstick that market, to get the market moving.

“It's not just about the economy, it's also about people's hopes and dreams, you always remember that moment, if you've done it, when you get that key and you walk into your first flat, it's a magic moment.”

The Government are also backing builders who want to develop sites they own but have found it difficult to get finance from leading banks.

It has also been revealed that developers will only pay for land they have built on once the house is sold.

First time buyers who are trying to get on the property ladder will welcome the scheme which gives them a realistic view of raising a deposit.

The scheme gives hope to people eventually owning their first home but won’t be available to homeowners who already have a mortgage.

The scheme is due to start in July with its aim to get 16,000 new homes built which could also lead to work for 32,000 people.

By 2015 it is hoped that 450,000 homes will be built with many of them being publically owned.

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By Amanda Bainbridge