If you are a prospective homebuyer, you have likely heard of the latest government initiative. Many are set to benefit from the launch of the new mortgage guarantee scheme which is part of the Prime Minister’s pledge to turn ‘generation rent’ into ‘generation buy’.
It means thousands of people can now take mortgages for 95% of the property purchase price up to a value of £600,000.
Here are the answers to some frequently-asked questions to help you understand more….
What does the government-guaranteed mortgage scheme involve?
These 5% deposit mortgages will be available to both first-time buyers and current homeowners.
However, unlike their predecessor, the Help to Buy scheme, these mortgages will not be restricted to new build properties. In fact, banks have announced that they will not lend against new build homes under this initiative.
Which lenders are launching these mortgages?
The chancellor Rishi Sunak confirmed in his last Budget that some of the biggest high street lenders will join the scheme. NatWest, Barclays, and Santander, to name just a few, have already launched their products. Other lenders, such as Virgin Money, and more are set to introduce their own products in the coming weeks.
Who stands to benefit the most from the government-guaranteed mortgage initiative?
For first-time buyers, saving for a large deposit often leaves them feeling excluded from being able to buy.
It can be a daunting prospect, so high loan-to-value (LTV) mortgages are often popular with this market.
However, current homeowners who struggle to afford a heavy down payment can also take advantage of the initiative.
It is these groups that stand to benefit the most from the government-guaranteed mortgages.
As buyers’ confidence continues to build, the market is looking positive for the months ahead. Although the stamp duty holiday is due to end, 95% loan-to-value mortgages backed by the government may help to curb some of the fall off.
What should I watch out for?
As exciting as this scheme is, it is important to consider your options before deciding.
While a 5% deposit may seem like a good idea in the short term, it will likely come with higher repayment rates. So, if you can afford a larger deposit, there might be a better option out there for you.
How Home Legal Direct can help you?
Home Legal Direct facilitates fast and efficient home transfer solutions for our customers throughout the United Kingdom.
From purchases to remortgages, and everything in between, we are here to support you every step of the way. Get a free online conveyancing or survey quotation in seconds and embark on your property journey today!
Peter Joseph is CEO of Home Legal Direct
