The Help to Buy guarantee scheme was due to start in January 2014 but the government has announced that people will be able to start applying for the new mortgage guarantee from next week.
Several high street banks will be offering the new Help to Buy mortgages to customers, ranging from 80 to 95 per cent of the property’s value.
The mortgages – backed by the government – will help thousands of people buy new or existing homes up to a maximum value of £600,000.
It is aimed at people who cannot get on the property ladder – or move to a new home – because they cannot afford the large deposit required, often up to 20 per cent. However, under the new mortgage guarantee scheme, the buyer would only need a 5 per cent deposit.
The government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender. To be able to offer the guarantees ahead of schedule, the government will be allowing lenders to start writing loans that will become part of the scheme once it opens in January and because lenders know that they will be able to purchase a guarantee on these loans when the scheme opens they are able to offer high loan to value mortgages much sooner.
I will continue to keep you posted on further developments, however, for a full explanation of how the scheme will work, please read me previous blog. https://www.bailey-fs.co.uk/help-buy/