First Time Buyer Schemes for New Builds
Before the global economic crisis, lenders were content to lend people all, some lenders offering 120% of the property value, on the assumption property prices will just keep going up and up. But that certainly wasn’t the case, and when the property market crashed first time buyers suddenly had to start producing 20% deposits, and lending criteria became incredibly tight. There are now various first time buyer schemes for new builds available.
These trends meant that the Government was obliged to do something to help solve the problem: the result was first time buyer schemes on new build properties. Such Government schemes allowed first time buyers to get on the property ladder, and created a market for the building industry.
The Help to Buy government backed scheme was introduced in March 2013, basically this scheme means that the Government lends first time buyers 20% of the property value, through an equity loan, so the buyer only needs a five per cent deposit to obtain a 75% loan to value mortgage.
The scheme is capped at homes worth up to £600,000, but it means that borrowers need a much lower deposit, and will have lower monthly mortgage repayments, meaning that they are more likely to be accepted for home ownership.
For example, on a property worth £200,000, the buyer would present a £10,000 deposit; the Government would add £40,000, through an equity loan; and the mortgage would be for £150,000, 75% of the property value.
If you live in Scotland there is a similar scheme called the MI New Home Scheme. Like in England, the Scottish scheme is designed to mean that first time buyers wishing to buy a new home only need a 5% deposit.
However the maximum value of properties that this scheme applies to is £250,000 and it also applies to existing home owners, who could get a 95%mortgage also.
The New Build Cymru Scheme is soon to be implemented in Wales, and is the same in its details as the Scottish scheme.
Applicants for this scheme need a good credit history, they also need to be able to show that they can meet the repayments, and they also need to have been able to accumulate a deposit of five per cent. It means, however, that first time buyers can buy new build homes, which helps to create a demand for the building industry, and allows first time buyers to access the types of homes that might previously have been out of their grasp.
For more information about the first time buyer scheme – Help to Buy, and other schemes for first time buyers, and to find out if you would qualify for this sort of scheme, please get in touch with Ascot Mortgages and we will carry out a quick free initial consultation with you to give you all the information you need to decide whether this type of mortgage is right for you.
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