Last week details were released of a further government financial boost to the UK mortgage market, called the Help to Buy Mortgage Scheme, beginning in January 2014.This follows the successful Help to Buy Equity Loan Scheme launched earlier this year.
The new mortgage scheme, which is worth some £12 billion, will allow residential property buyers with a deposit of 5% to purchase a property up to a valuation of £600,000. The scheme can be used to re-mortgage but is NOT open to second home owners, foreign buyers or buy-to-let landlords.
There will be strict lending criteria and credit checks, and it is envisaged that this scheme will work with the Funding for Lending Scheme which has seen mortgage rates plummet to current levels.
It is also aimed at first time buyers, who face the most problems when struggling to get on the housing ownership ladder. There are some great mortgage deals around for first time buyers; one lender is offering 0% for the first six months so as to assist during those difficult first few months of home ownership.
First time buyers need as much help as they can, as currently house prices are on average ten times the mean salary of a young person, and the National Housing Federation believes that this will increase to sixteen times by 2020.
Some lucky first time buyers are able to resort to ‘the Bank of Mum and Dad’, who are currently injecting some £2 billion per annum into the market to help their children buy their first home.
We have certainly noticed a huge increase in property instructions; in particular our specialist lawyers who act for first time buyers report a big upsurge in these types of instructions.
The number of first time buyers has increased to the highest levels since 2007. Halifax reports that there were 120,000 first time buyers during the first six months of 2013, which is an increase of 20% on 2012.
More than 50% have bought homes over £125,000 which brings them into the stamp duty threshold, and those buying in London have an average deposit of £60,747.
If you require assistance with your property purchase and would like a conveyancing quote, please fill out our online enquiry form or call us on 0207 387 2032.
