Prime Minister David Cameron and Chancellor George Osborne said that lenders can start offering the mortgages from today and they will be guaranteed by the government from January 2014.
High Street banks including Natwest, RBS, Halifax and Bank of Scotland will start offering new Help to Buy mortgages this week and Virgin Money said it will be offering new guaranteed mortgages to borrowers in the New Year. Aldermore Bank has confirmed that it is joining the scheme in January, and is exploring whether this date can be brought forward.
Natwest and RBS customers will be able to start the process of applying for a mortgage today, with other banks to follow in the next few days.
The Help to Buy: mortgage guarantee is aimed at thousands of people frozen out of the housing market because they cannot afford large deposits of up to 20% of a property’s value. It means someone trying to buy a £200,000 house currently needs to save up a deposit of £40,000 but under the scheme there will be mortgages for up to 95% of a property’s value for homes worth up to £600,000.
Under the scheme, buyers will only need a deposit of as little as 5% and depending on the size of deposit, the government will then guarantee up to 15% of the property’s value, in return for a fee from the lender.
‘Too many hardworking people are finding it impossible to buy their own home, people who can afford the monthly mortgage payments but haven’t got rich parents and can’t pay the deposit up front,’ said the Prime Minister.
‘There is a need for government to act. Buying your first home is about far more than four walls to sleep at night. It’s somewhere to put down roots and raise a family. It’s an investment for the future. Above all, it’s a sign that everything you’ve put in has been worth it,’ he explained.
‘Our Help to Buy Equity Loans, have already helped over 15,000 people buy a new home. But we’ve got to go further and finish the job we’ve started. So from today, thousands of people will be able to get a foot on the housing ladder by applying for the new Help to Buy mortgage guarantee. If you’ve got 5% of the funds for a mortgage deposit, we’re providing a guarantee to the banks to help you get the rest.
‘Help to Buy is going to make the dream of home ownership a reality for many who would otherwise have been shut out. This goes right to the heart of my vision for Britain, a country where everyone who works hard can get on in life. Moves such as Help to Buy will also encourage house...
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