The Government has unveiled new plans to boost home ownership across the country.
An estimated 100,000 prospective and existing homeowners will be helped to buy their dream home through the NewBuy Guarantee – a scheme that brings lenders, builders and the Government together to offer mortgages on new-build properties with much smaller deposits than currently required.
The increased demand in homes will also give a boost to the house builders and the economy, and see thousands of workers returning to building sites across the country.
At the same time, housing minister Grant Shapps announced details of the updated Right to Buy scheme, which will give up to two million social tenants the opportunity to buy their council home with a discount of up to £75,000 and, for the first time, ensure that additional properties sold are replaced with new affordable homes for rent.
Three of the largest high street lenders and seven building firms will begin to offer mortgages on newly-built properties to people with a five per cent deposit; a financial product not available anywhere else in the market. Other providers, including smaller housebuilders, are expected to follow their lead in the coming weeks and months.
So instead of a typical buyer requiring a £40,000 deposit for £200,000 property, they will now only need £10,000. The Government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.
The scheme will offer help for up to 100,000 buyers who would otherwise be frozen out of the market.
The deals will include:
Barclays will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey at 4.99 per cent fixed rate for two years and 5.89 per cent fixed rate for four years
Nationwide will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bovis, Bellway, Persimmon, Redrow and Taylor Wimpey at 5.69 per cent fixed rate for three years and 5.99 fixed rate for five years; and
NatWest will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey at just 4.29 per cent fixed rate for two years and 4.99 per cent fixed rate for five years.
In addition, Crest Nicholson will be joining the scheme imminently.
Housing Minister Grant Shapps said: “We want to help everyone achieve their aspirations, and feel the pride of home ownership. So I’m delighted that … the NewBuy Guarantee will give thousands of prospective buyers the chance to buy a home with a fraction of the deposit normally required.”
