A scheme to help thousands of people buy their own home will be launched next week - three months earlier than planned. The full details of the Help to Buy mortgage guarantee scheme are still to be announced but here is the currently available information.
Where will the Help to Buy mortgage guarantee scheme be available?
- Halifax,RBS and NatWest have signed up for the scheme with other lenders expected to follow in due course
- Although the launch date for the scheme has been bought forward this only applies to the application process, funds will still only be available from the original launch date in January 2014
How does the Help to Buy mortgage guarantee scheme work?
- the scheme is aimed at people looking to get on the housing ladder but are unable to raise the large deposit (circa 20%) required, under the scheme only 5% deposit will be required
- the government and the lender will then jointly guarantee up to 15% of the properties value in return for a small fee
- only repayment loans will be available
- there will be tough checks concerning affordability and all income will be verified
- mortgages will not be available for people with a poor credit history
According to official statistics mortgage lending is around half the level it was five years ago, it is hoped this initiative will allow more people to get on the property ladder. However, the scheme is not without its critics who feel that there is a danger of another property boom if mortgage lending criteria is relaxed too much.