We reported last month in our budget review on the Government's proposal to introduce a guarantee offering first-time buyers a wider choice of mortgages that require a deposit of just 5% of the loan.
This Government scheme is similar to previous policies designed to support those wishing to get on the property ladder for the first time and in turn boost the housing market and the economy.
Chancellor Rishi Sunak said, ‘Every new homeowner and mover supports jobs right across the housing sector, but saving for a big enough deposit can be hard, especially for first-time buyers.
"By giving lenders the option of 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.’
So here’s what you need to know about the new scheme.
- Repayment mortgage available to anyone looking to buy a home with a purchase price of up to £600,000, unless it is a buy-to-let or second home.
- Smaller deposits of 5% required, though better interest rates may be available for those able to stretch to a 10% deposit.
- Government offers a partial guarantee, generally 15%, to compensate mortgage lenders if the borrower defaults on repayments.
- Lloyds, Santander, Barclays, HSBC and NatWest launched their new mortgages this week with Virgin Money following next month.
- Some lenders have said that these products would not be available for new-build properties.
- Affordability checks will continue. Those who have lost a job or where income has been sporadic due to the pandemic may find it difficult to secure a mortgage.
Our advisers have over 40 years’ experience of negotiating mortgages and can guide you through the different policies on offer helping you to get the best deal. We’re here to offer support and guidance every step of the way, leaving you to concentrate on the more important things - like getting excited about your new house!
Poole Townsend mortgage advisors are only a click away, so why not contact us for professional guidance on your mortgage?