The NewBuy guarantee scheme has now been launched, offering the opportunity for first time buyers in England to get a foot on the housing ladder, with lenders and the government underwriting a mortgage for a new build house or flat worth up to £500,000.
As we all know, the problem for a lot of people over the last few years has been finding the money for a deposit as you are now expected to find around 20% of the price of the property. This initiative will enable people to buy a new build with a down payment of only 5%.
The idea under the NewBuy scheme will be that developers will pay the lender 3.5% of the property price and the government will guarantee an additional 5.5%. The government estimates that this will help up to 100,000 buyers get their first home.
There has been a mixed reaction to this new scheme, with many believing it may still over stretch many first time buyers, and also that it is appealing more to home builders than to home buyers. We will wait to see what happens in the next few months…..