Great new mortgage scheme for first time buyers
29 Apr, 2021
A new government-backed mortgage scheme was launched on Monday (19 April 2021) that will help first time buyers to get on the property ladder and also current house owners to climb the property ladder. The new scheme was first announced in the early March Budget and will mean that potential house buyers will need to raise just 5% deposit towards the cost of a house valued up to £600,000. The mortgage scheme comes with a government guarantee for lenders, that will enable first time buyers to get a 95% mortgage- subject to the usual affordability checks. The new scheme is just one of several ways in which the government is trying to make home ownership possible for more people.
The new scheme will be available from many lenders on the high street including Santander, Lloyds, Barclays, HSBC and NatWest who have all launched the scheme and Virgin Money will be following in April. The new scheme will be warmly welcomed as a study has found that the demand for home ownership soared during the Coronavirus lockdowns and that 77% of those renting are now saving for a house deposit. The launch of the scheme coincides with the current upward trend in house prices. The scheme is aimed at first time buyers and those who are already hose owners, but will not apply to those hoping to buy-to-let.
In recent months, there has been an increase in the number of people house hunting and also the number of house sales that have been taking place. This has been buoyed up by the announcement to extend the Stamp Duty holiday until 30 June 2021. Interestingly, Rightmove states that this tax break has led to an average house price increase of £6,733. This is because of the demand on properties from buyers wanting to take advantage of the tax break. Rightmove has also pointed out that this is only the second time that there has been a monthly increase of 2% recorded for house prices in the last five years.
Chancellor, Rishi Sunak feels that the new mortgage scheme will have many advantages for the housing sector, as he explains:
"Every new home owner and mover supports jobs right across the housing sector, but saving for a big enough deposit can be really hard, especially for first-time buyers’.
He went on to explain that this situation would be further enhanced now that lenders were being given a government guarantee on 95% mortgages:
‘Many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home."
Spending so much time at home during lockdown has made many renters keen to buy their own property – especially one with an outside space and home office space. The new scheme evolved following a survey found that many renters were struggling to get a deposit together and that there was a dearth of low deposit mortgages available on the high street.
Robert Luff comments “the demand from buyers is as high as I have known it but fortunately there is a good supply of property to meet the huge demand.”
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