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Budget 2013: Chancellor extends home-buying scheme | |
(35 minutes later) | |
Chancellor George Osborne has announced new plans to help people to buy their own homes. | Chancellor George Osborne has announced new plans to help people to buy their own homes. |
The 'Help to Buy' scheme improves on a previous scheme known as FirstBuy. It enables buyers to put down a 5% deposit on a newly built home. | |
Up to 20% of the cost of the home is funded by a "shared equity" loan, which will be repayable when the home is sold. | Up to 20% of the cost of the home is funded by a "shared equity" loan, which will be repayable when the home is sold. |
That loan will be interest-free for the first five years. | That loan will be interest-free for the first five years. |
The remainder is paid for with a standard mortgage. | The remainder is paid for with a standard mortgage. |
Whereas the previous scheme was only open to first-time buyers, this one will be available to all buyers of newly built homes. Previously there was also an income limit of £60,000 a year, but this will no longer apply. | |
It will cover new build homes up to the value of £600,000. | |
Mortgage help | Mortgage help |
The chancellor also announced a new mortgage guarantee, which he claimed would dramatically increase the availability of loans. | The chancellor also announced a new mortgage guarantee, which he claimed would dramatically increase the availability of loans. |
"We're going to help families who want a mortgage for any home they're buying, old or new, but who cannot begin to afford the kind of deposits being demanded today," he said. | "We're going to help families who want a mortgage for any home they're buying, old or new, but who cannot begin to afford the kind of deposits being demanded today," he said. |
It will run for three years from the start of 2014 and will be used to support £130bn of mortgages. | It will run for three years from the start of 2014 and will be used to support £130bn of mortgages. |
The idea is that loans from High Street lenders would be underwritten by the government. | The idea is that loans from High Street lenders would be underwritten by the government. |
If a borrower defaults on a mortgage, the government will step in to compensate the lender. In theory, lenders will be happier to accept smaller deposits as security for loans. | |
Up to now, the best mortgage rates have only been available to those able to put down a deposit of up to 20%. | |
"It's a great deal for homebuyers," said the chancellor. | "It's a great deal for homebuyers," said the chancellor. |
The news was also welcomed by lenders. | |
"We believe that the mortgage guarantee scheme will give a much-needed boost to the housing market and, most importantly, address the issue of accessibility," said Stephen Noakes of Lloyds Banking Group. | |
"Crucially, this scheme will not only help first-time buyers, but also second-steppers," he added. | |
Another scheme, known as NewBuy, was launched just over a year ago, but saw only 1,500 house sales in its first nine months. | |
If a borrower defaults on a mortgage, the government will step in to compensate the lender. In theory, lenders will be happier to accept smaller deposits as security for loans. | |
Up to now, the best mortgage rates have only been available to those able to put down a deposit of up to 20%. | |
"It's a great deal for homebuyers," said the chancellor. | |
The news was also welcomed by lenders. | |
"We believe that the mortgage guarantee scheme will give a much-needed boost to the housing market and, most importantly, address the issue of accessibility," said Stephen Noakes of Lloyds Banking Group. | |
"Crucially, this scheme will not only help first-time buyers, but also second-steppers," he added. | |
Another scheme, known as NewBuy, was launched just over a year ago, but saw only 1,500 house sales in its first nine months. |