Housing Market and Hopeful Home Buyers Get Good News from George Osborne
New schemes from the government are expected to help hopeful home buyers get onto the property ladder. It is also designed to boost the housing market and home builders. The government expects 200,000 borrowers a year will benefit from the new Help to Buy schemes.
There is a lending scheme as well as a loan guarantee scheme. The lending scheme is available to those looking to buy a newly built property. It will begin on April 1 and run for three years. The buyer will put down 5% of the loan deposit. The government will lend up to 20% of the property value interest free for five years with the remaining 75% of the property purchase coming from a mortgage lender. The first five years of the government loan is interest free and will then have an attached interest rate of 1.75% rising according to inflation plus 1%.
The mortgage guarantee scheme will begin in January 2014 and will also run for three years. Buyers will provide a 5% deposit with the government providing a guarantee of 15% of the property value.
Both schemes are for those looking to buy a home with a value level of up to £600,000.
Mr. Osborne said, “The deposits demanded for a mortgage these days put home ownership beyond the great majority, who can't turn to their parents for a contribution.
“And that’s not just a blow to the most human of aspirations, it’s a setback to social mobility and it's been hard on the construction industry too. This Budget proposes to put that right, and put it right in a dramatic way.”