First Time Buyers to Consider ‘Help to Buy’ Scheme

Petty’s are suggesting  first time buyers and movers to take advantage of Phase II of  the Government’s Help to Buy scheme, which is now set to launch in just a few days time.

Phase II of the scheme, which was set to go live in January 2014 but has been brought forward by three months, allows mortgage lenders to guarantee up to 15% of the value of a mortgage loan where the buyer only has a small deposit (around 5% or more). The £12bn scheme, which will underwrite about £130bn of mortgages over the next three years will also mean that the lender will then be able to claim on the guarantee if the property is ever repossessed or sold at a loss.

For buyers this could mean that mortgages will be become more easily attainable and that the market will see lenders offering 95% mortgages once again. So far, Royal Bank of Scotland, NatWest and Halifax have each signed up to the scheme.

Ian Bythell, Director  said “It’s fantastic to see further measures from the Government to help first time buyers and movers get their feet firmly on the property ladder. We have an excellent selection of properties in our area from unusual historic houses to stylish, new-build homes and we welcome the early launch of Phase II which will help buyers secure their own homes even sooner.”

The scheme is open to both first-time buyers and movers but they will need to be able to afford the mortgage repayments and have a clean credit history; for example, anyone who has a county court judgment against them for more than £500 in the three years before they apply for a loan would be barred. In order to deter companies from reckless lending, should a property be repossessed or the value of the mortgage cannot be recovered, the lender would lose 5% of the government’s compensation paid by the guarantee.

The scheme is available on both new and existing homes costing up to £600,000, however lenders may still apply their own restrictions on types of property that they will offer mortgages on such as properties above shops. The scheme itself, also excludes buy-to-let properties and second homes and borrowers would be asked to sign a formal declaration stating that they do not own another property anywhere else in the world.

The scheme cannot be used in conjunction with the government’s NewBuy scheme, which helps buyers with a 5% deposit secure up to a 95% to purchase a new-build property from participating builders in England.