Mortgage guarantee scheme launched
The Prime Minister and the Chancellor have officially launched the Help to Buy: mortgage guarantee scheme. The £12 billion scheme is expected to help thousands of people to buy their own home. The Government hopes that the scheme will revitalise the property market across the UK.
The scheme is the second part of the Help to Buy scheme and was expected to start in the New Year but has been brought forward to enable home buyers to start benefitting from the scheme. The first scheme, launched in April of this year, allowed buyers to purchase a new-build property with a 5% deposit. This scheme has already resulted in some 15,000 mortgages being issued.
The new guarantee scheme will allow buyers with a 5% deposit to apply for a mortgage on a home (old or new) worth up to £600,000. The Government then guarantees a further 15% of the property value in return for a fee from the lender. The scheme is open to first-time buyers as well as existing home owners. Applicants to use the scheme will face the same checks as other borrowers and the scheme will run until 31 December 2016.
On the launch of the scheme the Prime Minister said:
‘Too many hardworking people are finding it impossible to buy their own home – people who can afford the monthly mortgage payments but haven’t got rich parents and can’t pay the deposit up front….
Help to Buy is going to make the dream of home ownership a reality for many who would otherwise have been shut out. This goes right to the heart of my vision for Britain – a country where everyone who works hard can get on in life.’
High Street banks including Natwest, RBS, Halifax and Bank of Scotland have already started offering the new Help to Buy mortgages. Other banks including Virgin Money and Aldermore Bank are expected to begin offering mortgages in the New Year and other lenders are expected to follow suit. Lenders can start offering the mortgages now, and they will be guaranteed by the government from January 2014.