The launch of the 5% deposit Help to Buy mortgage scheme will be limited to properties worth up to £600,000
Chancellor Rishi Sunak announced a new 95% mortgage scheme available to everyone as part of their bid to encourage ‘Generation Rent’.
The launch of the 5% deposit Help to Buy mortgage scheme will be limited to properties worth up to £600,000 and is open to everyone who wants to own a home as part of the Prime Minister’s ‘Generation Buy’ campaign.
It is thought that lenders who utilise the scheme will offer fixed mortgages for a minimum of five years to buyers, with the financial institutions able to buy a government guarantee to compensate them for a portion of their losses in case a property is repossessed.
The property industry has come out in support of the measures outlined by the Chancellor.
Linda Kirk, Director of Conveyancing Adkirk Law, welcomed the Mortgage Guarantee scheme for first-time buyers which gives them the opportunity to buy their own home backed by major banks and building societies with up to 95 per cent mortgages.
Many lenders have been asking for increasing levels of deposits so many first-time buyers have found it difficult. This will also help stimulate the economy and brings in a new kind of buyer into the market as long as lenders are committed to it, she said.
Phil Bailey, Director at mortgage technology company Twenty7Tec said: A government-backed 95% LTV mortgage scheme is just what customers and lenders need in the wake of the pandemic. Although we have seen a 40% increase in mortgage activity, mainly driven through the SDLT reduction and buyer demand, many lenders affordability and acceptance criteria remain stricter than it has been for many years.
He said that coupled with rising house prices, rents and it becoming harder for many to save the required 10-15% deposit. A scheme that supports both customers and lenders will surely provide much need security and confidence in the mortgage and housing market.