Government’s new ‘Help to Buy’ initiative at a glance
There was welcome news from the Chancellor who announced a package of support benefits to help those people who have at least a 5% deposit to buy a home through two schemes backed by the Government. The aim is to increase the supply of low deposit mortgages and new housing.
Mr Osborne said “Help to Buy is a dramatic intervention to get our housing market moving”. For newly built housing, the government will put up a fifth of the cost, and for anyone who can afford a mortgage but can’t afford a big deposit, our mortgage guarantee will help you buy your own home.”
However, as more details emerged it appears that only one of the schemes – the ‘Help to Buy Mortgage Guarantee’ will be available in Scotland. Calls have been made for the Scottish Government to implement the full support package.
How it Works
Help to Buy Mortgage Guarantee
This scheme is for you if you have a small deposit and can afford the monthly repayments on an 80-95% mortgage. This option supports purchasing either a new build property or an older home. It is also available to those wishing to re-mortgage with a new lender to obtain a better deal. Because the Government are guaranteeing an element of the loan lenders will be more willing to increase the amount they are prepared to lend.
The main criteria for the Help to Buy Mortgage Guarantee are
- Available on new builds and existing properties
- You will need a 5% deposit or the equivalent in equity if re mortgaging.
- Available to existing home owners and first time buyers
- You must be able to secure a mortgage from a lender
- Available from 1st January 2014
- Maximum home purchase £600,000
What is the likely effect on the Property Market?
Clearly, with higher loan to value mortgages becoming more readily available it is anticipated that this will drive the demand for property and therefore boost the market. The law of supply and demand suggest that this could also have an impact on price movement in an upward direction. However, as the scheme is being implemented in January 2014 there may be a window of opportunity during 2013 to benefit from what we believe will be a broadly static year for property prices.
If this has captured your imagination and you would like to find out more about property prices in your area – why not call us and ask for a no obligation consultation