NewBuy Guarantee Scheme not just for first time buyers

NewBuy Guarantee Scheme not just for first time buyers

The Housing Minister, Grant Shapps, has announced his intention to “go the extra mile” for buyers looking to get on the housing ladder by launching the NewBuy Guarantee scheme in March 2012.
The scheme will bring lenders, builders and the Government together to offer mortgages to buyers on new build properties.  Deposits will only be a fraction of the current deposit requirements.  Typically a buyer purchasing a property at £200,000 will require a deposit of £40,000 but under this scheme the deposit would reduce dramatically to just £10,000.
The Housing Minister confirmed that, whether buyers are first time buyers or moving up, the scheme will be available to UK citizens looking to purchase a new build house or flat, up to a maximum of £500,000, as their main home.
Move with Us CEO, Sean King, commented:
“The NewBuy Guarantee scheme is welcome news for aspiring homeowners, significantly reducing the deposit needed to buy their own home by around 75%. On a home worth £120,000 buyers would only need a deposit of around £6,000 rather than as much as £24,000*. In this case the £18,000 reduction could mean the equivalent of around three years of hard saving for a couple, both earning the average UK wage.
While it is a positive move, we are waiting for more detail about the eligibility criteria for the 95% loans and we question if this will be wide enough for the Government to reach its target of helping 100,000 families and young people move into homeownership. This level of detail and the reliance on new home developers to promote the scheme may actually deter the less committed buyers from applying at all. Clear guidance on eligibility and a promotional push will be needed for the scheme to succeed”.
The scheme, whilst it is welcome news, will only offer around 100,000 buyers the ability to purchase a new build property with only a 5 per cent deposit.  When you consider that over 650,000 applications were made to the Land Registry in 2011 this could still leave plenty of buyers unable to either move up or even get on the ladder in the first place.
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