After George Osborne announced the Government’s latest attempt to stimulate the housing market last week there has been some confusion about what the scheme will actually mean for homebuyers. Here’s our guide to the two policies which Osborne hopes will reverse the decline in homeownership and trigger a construction boom.
Help to Buy
Property Type: Only applicable for new builds.
Deposit: A minimum of 5%is required.
Who can claim: Unlike previous attempts to stimulate the property market this scheme is open to all homeowners not just first time buyers.
When it is available: The scheme will be available from 1st April 2013 and will run for three years. The scheme will provide £3.5bn in investment.
How does it work?
The Government will lend up to 20% of the mortgage in an interest free equity loan, which can be paid back at any time over 25 years or upon the sale of the property. After 5 years a fee of 1.75% will be added to the loan which will rise annually by the RPI inflation rate +1%.
With a minimum of 5% needed for a deposit and 20% covered by the government buyers will only need to secure a maximum of a 75% mortgage.
Property type: Both new build and existing homes up to a maximum value of £600,000 can qualify for the scheme.
Deposit: Buyers need a minimum of 5% and maximum of 20% deposit
Who can claim: Like the Help to Buy scheme, all home buyers will be accepted.
When it is available: The scheme will not be available until January 2014.
How does it work?
The government will make £12bn available to mortgage lenders to be used as a guarantee of 15% towards a mortgage allowing greater number buyers with a smaller deposit access to a mortgage.
More information on the Mortgage Guarantee scheme will become available later on in the year.
