by Mark Johnston
Today, the government has launched another scheme to try and help first time buyers get a foot on to the housing market. The scheme is a combined effort from the government and housebuilders to offer an equity loan of up to 20 per cent to potential buyers.
A recent survey, commissioned by an insurer, revealed that 75% of Ministers of Parliament (MPs) feel that people, with stable incomes and can afford repayments should be helped onto the property ladder. This financial assistance should be provided even when those individuals don’t have the 10-20% deposit required. Today, this assistance is here.
Additionally, within the same survey it was revealed that over 83% of MPs feel that their constituents need more support getting into the housing market. In London, it was suggested that this figure is closer to 100% of constituents will need support, a staggering figure. Wednesday 16 March, 15 local authorities have signed up to a scheme called Local Lend A Hand, aimed at helping first time buyers with their deposits to get onto the property ladder.
Banks and building societies are now responding too. The deposit remains the biggest barrier to homeownership and the average deposit has gone up from 10% to 21% in recent years. There are currently there are over 200 mortgage deals that will lend 90% of property value, last year there were less than 150. These LTV deals represent only a fraction of the deals that were available before the Credit Crunch began in 2008.
Five local authorities, including Warrington, Blackpool, Newcastle under Lyme, Northumberland and East Lothian will be piloting this new initiative, which will see first time buyers with only a 5 per cent deposit helped with a top up from their local council.
Lloyds TSB is the first to sign up to the programme. The councils will put 20 per cent of the price in a Lloyds TSB account, the funds will not go to the buyer and the lender will ask for 5 per cent of this deposit.
Under this new scheme, the government and housebuilders will provide equity of up to 20 per cent so when the borrower has a 5 per cent deposit, they can apply for a loan to value ratio of 75 per cent.
£500 million is being made available by the Government all over the UK for the next two years to fund this scheme by the name of FirstBuy. There is an expectation that over 10,000 people in mainland UK will be helped through this schme.
Over 100 builders have opted in to help out, and banks have agreed to offer the 75 per cent LTV.
Grant Shapps, the Housing Minister said “With 80% of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder.”
Story link - More Help for First Time Buyers
Related stories to : More Help for First Time Buyers