Thousands of people will benefit from scheme
People in England are being offered help to get on the property ladder under the new government mortgage indemnity scheme.
The NewBuy scheme lead by the government, supported by Barclays, NatWest and Nationwide will help people borrow up to 95% of the value of new homes. Under the scheme, the builder pays 3.5% of the sale price and the tax payers provide an additional guarantee of 5.5% but the money will be called upon only in the event of a major property crash.
It is almost impossible for 1st time buyers to get on to the property ladder, all monthly outgoings are going on rent and bills or on debt owed out. 1st time buyers still living with parents, are in a more fortunate position, that they can save up the 5% required to be eligible for the scheme. Those renting and paying bills will find it more difficult in the economic climate to save 5%, but this scheme is hoping to encourage people to save up and get that first foot on the ladder.
The scheme offers buyers:
- 95% mortgages on New homes from builders who are in the scheme
- Up to the property value of £500,000
- Tenants of council houses up to 35% discount on buying their home
- Up to £75,000 discount for tenants wanting to buy their council houses
- Applicants must be UK citizens or have indefinite leave to remain in the UK.
Alongside offering 95% mortgages to 1st time buyers, the scheme is offering tenants of social housing up to 35% discount, with an extra 1% for each year they have lived in the house. People living in council houses, wishing to buy them can get up to £75,000 off the value of the property if they wish to purchase.
David Cameron said the money generated from the sales of council houses and flats will go towards building new affordable homes for rent. He also said of both schemes, “strong families and stable communities are built from good homes”. That’s why I want us to build more homes and I want more people to have the chance of owning their own property.
May people have welcomed the scheme, one of Britain’s biggest house builders, Barratt Homes, said 20,000 people have already registered an interest. Many first time buyers see no other option than to go into the scheme and pay 5% deposit, rather than the 10-25% which is currently being offered by lenders.
Many people have voiced their concern over the government interfering with the housing market, critics say it should be left alone and tax payers should not guarantee anyone’s mortgage. If people are going to be able to get on the ladder, some scheme needs to become available and the NewBuy is a great way of getting on the ladder.