Now, or at any rate within the next three years, may be a good time to buy a house if you only have a 5% deposit and wish to buy. The reason is partly because house prices appear to be rising and partly because the Government have extended the Help to Buy scheme to second hand homes up to a maximum price of £600,000.
Essentially whether you are a first time buyer or an existing homeowner wishing to move, certain banks will now lend you 95% of the purchase price, subject to survey and status , with the Government guaranteeing 15% of the loan in the event of default and loss on sale.
Thus on a purchase price of £200,000 you will “only”need a deposit of £10,000 rather than £40,000 or more which most first time buyers do not have.
Currently these loans at reasonable rates of interest, are available from RBS, Natwest and Halifax with more lenders due to join later this year.
This scheme has been around for some time but only for first time buyers of new build properties and was designed to kick start the housing industry. It has proved to be very popular with developers and first time buyers alike and it is easy to see why! The extension to the scheme will be much simpler in operation and takes us back, almost, to the mortgage indemnity policy principle of the 1970’s and 1980’s.
It will still be cheaper to borrow from the bank of Mum and Dad and then obtain a lower loan to value mortgage but this is not possible for everybody. This could be very good news!
Please contact us for more information on how the scheme works in practice and the legal aspects to be aware of.