Since the Chancellor announced the new Government-guaranteed mortgage scheme, the market has waited patiently for the products to launch. Now, as they reach the market, a fresh wave of excitement is sweeping the industry. The initiative repeats the Prime Minister’s promise to help turn “generation rent” into “generation buy,” as thousands are set to benefit. For many, the scheme has restored their hope of finally moving up the property ladder.
What are the conditions of the Government-guaranteed mortgage initiative?
Under the initiative, new 95% loan-to-value mortgage products will be backed by the Government on properties up to the value of £600,000. They will be available to first-time buyers looking to get on the ladder, and existing homeowners wanting a better deal. The scheme has been compared to the previous Help to Buy project, but this time will not be exclusive to new-build properties. A clear distinction has recently been announced as banks say they will not lend against new-build homes this time.
Which lenders have committed to the scheme?
During his speech at the Spring Budget, Rishi Sunak confirmed that some of the most well-known lenders were taking part. For some of these lenders, their products have already joined the market. NatWest, Barclays, and Santander have all seen their products launch. More are expected to introduce their deals in the coming weeks, including the likes of Virgin Money. With all this choice now available, buyer’s confidence has started to grow.
Who is likely to benefit from a Government-guaranteed mortgage?
The scheme reaffirms the Prime Minister’s pledge to help more people own their own homes. For too long, first-time buyers had lost hope of getting onto the property ladder. As living costs increase while salaries do not, saving for a large, upfront payment can feel impossible. This is where a Government-guaranteed mortgage can be essential. It restores hope by creating a savings goal that is more achievable, while also restoring the faith of first-time buyers in the system.
How do you know if a Government-guaranteed mortgage is right for you?
The Government-guaranteed mortgage scheme will be a lifeline for many. Where saving for a large deposit is unrealistic, these buyers will rely on this kind of deal. But it is important to consider the options you have available. Although the scheme may appear to be a fast-track onto the ladder, larger repayments will be incurred. So, for some buyers, if they have the chance to put more funds away or save for longer, a better outcome may be achieved.
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