We’re all familiar with the struggles faced by First-time buyers. Lenders expect purchasers to have sizeable deposits, and property prices are still out of reach for many, but good news is on its way. The Government are soon to be lending a helping hand in the form of a new FirstBuy Scheme.
£180m has been earmarked for the FirstBuy scheme which will enable around 10,500 first time buyers to purchase their very own new build property.
So how does it work?
Essentially, FirstBuy is a new 5-year interest free equity loan scheme. The loan (jointly provided by the Government and developers) could be as much as 20% of the purchase price. Purchasers themselves will be required to raise a minimum 5% deposit. The remainder of the balance of the property price can then be funded by a mortgage.
Below is an example of how the scheme could work for an eligible property priced at £160,000:
Property Price – £160,000
Purchasers minimum 5% deposit – £8,000
Interest free 5 yr FirstBuy loan at max 20% – £32,000
Mortgage required – £120,000
This scheme will go a long way to making mortgage thresholds more achievable. Without the FirstBuy loan the example above would require the purchaser to either obtain a deposit of £40,000 or secure a mortgage for £152,000 – both of which would be a struggle for the average first time buyer!
To qualify for the scheme, purchasers need to have a household income of £60,000 or less and priority will be given to key groups including social tenants and serving armed forces personnel.
The scheme will assist first time buyers who could not otherwise afford to purchase a property on the open market and is sure to provide a light at the end of the tunnel for many who dream of owning their own home. Visit propertywide or call 01908 854 436 for more information.