Last week’s budget saw the announcement of the Help to Buy scheme. The government scheme aims to stimulate the housing market and increase the availability of lower deposit mortgages in the market place.
Ipswich Building Society has said that, whilst it welcomes the Chancellor’s attempts to get the housing market moving, it still needs to see full details of the new ‘Help to Buy’ scheme proposed in the March budget before it can fully assess its potential.
Prior to the announcement of Help to Buy Ipswich Building Society launched a two year fixed rate mortgage for a 5 per cent deposit at 5.49 per cent, 5.7 per cent APR (fixed until 31 July 2015, the mortgage will then transfer to the Society’s standard variable rate, currently 5.49 per cent). This low deposit mortgage is available to First Time Buyers and those looking to remortgage a property in England and Wales. Completion fees are £975 with application fees of £150. Other fees and charges apply.
Paul Winter, Chief Executive, Ipswich Building Society says: “We believe that everyone should have the opportunity to own their own home and appreciate that it can be very difficult to raise a large deposit. We have worked hard to develop a sensible range of mortgage products that offer options to a range of buyers with varying levels of deposits.”
The Help to Buy scheme has two options. The first of these offers buyers of new build homes an interest-free equity loan from the Government. This scheme will be offered from 1 April 2013 and is available to both first-time buyers and existing home owners who wish to move to a new build property. The buyer will still need to raise a deposit of the value of 5 per cent of the house they want to buy, but can borrow a further 20 per cent on an interest-free basis (up to a maximum £120,000 loan) from the Government.
The second part of Help to Buy, which is a separate initiative to be introduced from the beginning of 2014, will provide a borrower with a guarantee from the Government to underpin their mortgage for up to 80 per cent of the loan, provided the purchaser provides a 5 per cent deposit. It is hoped that this initiative will encourage more lenders to provide lower deposit mortgages. There is to be further consultation undertaken before details are announced later this year.
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