Thousands of prospective homebuyers have eagerly anticipated the launch of the new Government-guaranteed mortgage scheme. After the scheme was announced by the Chancellor, many had their hopes restored that they could achieve their property goals. Now, with excitement in the air as the products join the market. The scheme echoes the Prime Ministers’ promise to transform “generation rent” into “generation buy,” as prospective buyers look to move up the ladder.
What does the Government-guaranteed mortgage scheme involve?
The scheme sees new 95% loan-to-value mortgage deals guaranteed by the Government on properties up to £600,000. They are available to both first-time buyers and existing homeowners, respectively. Unlike their similar predecessor, the Help to Buy scheme, these mortgage products will not be restricted to new-build properties. In fact, some banks have announced they will not lend against new build homes under the new initiative.
Which lenders are part of the project?
While speaking at the Spring Budget, Chancellor, Rishi Sunak, announced some of the biggest names in lending will take part. Santander, Barclays, and NatWest are just some of the banks that have launched their products, with more to follow suit. Other lenders, such as Virgin Money, have yet to introduce their deals, but the newfound choice available is exciting for the market.
Who is likely to benefit from the Government-guaranteed mortgage initiative?
The thought of getting on the property ladder can be intimidating. Many first-time buyers have felt no choice but to put off trying, as hefty down payments proving difficult to acquire. Without help from gifted monies or inheritance, some prospective homebuyers lost hope that they would be able to own their own homes. This is where the Government-guaranteed mortgage scheme can help. Not only does it restore hope in the form of a smaller deposit, but it also restores buyer’s confidence in a system that accommodates them.
So, is the Government-guaranteed mortgage scheme right for you?
First-time buyers have long called for more choices in the market to become available to them. While a five percent deposit can seem like a fast-track onto the property ladder, considering all your options is advisable. In the short term, a smaller deposit can appear to be the answer, but keep in mind you will incur a higher rate with repayments. Meaning, if you are able to save for longer or put more away, it may benefit you more in the long term.
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