A NewBuy Guarantee Scheme has been launched by the Government to allow first-time buyers and those that already own a home to put down a smaller deposit of 5% when buying a property.
The mortgage market in the UK today is constantly changing and many first-time buyers have to save at least 10% of the price of the property to put down as their deposit.
However The NewBuy Guarantee Scheme will now give buyers access to a mortgage on a newly built house if they have a 5% deposit instead of the standard 10%. An example of the scheme would see a £200,000 property needing a £10,000 deposit compared to the £20,000 that would be needed if the scheme wasn’t in place.
The scheme will hopefully create extra jobs for developers and construction. If more first-time buyers are taking advantage of the scheme, more houses will need to be built.
Major lenders such as Barclays, Halifax, Nationwide and NatWest have already signed up for the scheme releasing details of the 95% mortgage rates they will offer.
It is hoped the scheme will encourage first-time buyers because a more realistic amount is needed for a deposit and to help existing homeowners who are already paying their mortgage but can’t raise the necessary funds if they are looking to move.
Housing Minister Grant Shapps commented on the scheme: “This Government inherited a housing market in disarray, with millions of hard working people blocked from taking their first step on the housing ladder – their desire to buy a home no longer a dream, but a distant fantasy.
“We want to help everyone achieve their aspirations, and feel the pride of home ownership. So I’m delighted that from today the NewBuy Guarantee will give thousands of prospective buyers the chance to buy a home with a fraction of the deposit normally required.”
© Copyright Autonet Insurance
By Amanda Bainbridge