round up of the 2013 help to buy scheme

<p>Theoretically, the Conservative Governments new help to buy scheme is a step in the right direction. The aim of assisting people to get on the housing ladder has good intentions. However, there has been some outspoken suggestions that the help to buy scheme will create another “credit crunch”. It is important to state that banks subject to this scheme will undertake rigorous affordability check which means that only those with excellent credit will be able to benefit. At this early stage, only time will tell whether the help to buy scheme is a success.</p> <p>The help to buy scheme, launched in April 2013 offers interest free loans of up to £120,000 to prospective purchasers who have a 5% deposit. The scheme comprises of two phases. The first phase which applies to newly build properties only. Those with a 5% deposit can borrow up to 20% of the value of a new home from the Government in the form of a loan that is interest free for the first five years. The remainder is funded through a mortgage via one of the participating lenders. The obvious advantages of phase 1 is that borrowers are offered better rate than those who are not part of the scheme. Nationwide’s rate of 2.44% fixed for two years is an example of this.</p> <p>The second phase which applies to all homes, offers those who put forward a 5% deposit, a mortgage covering the other 95%. Lenders can sign up to the Help to Buy scheme and pay a fee to the government, which will provide a seven-year taxpayer guarantee covering 15% of the loan value. That guarantee protects the banks money and applies if the borrower enters into financial difficulty and subsequently defaults on their mortgage payments.</p> <p>If you would like further information or are looking to purchase a property call our award winning property department on (0116) 2999199</p>