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£250million in scheme to buy new properties
The government has backed a scheme that will allow first time buyers to get on to the housing ladder by buying a newly built property. The scheme will help buyers as they struggle to put together the large deposits required by lenders following the credit crisis.
In the past 110% mortgages were available to some purchasers with good incomes and little debt along with 90% to 100% for others. Now it is almost impossible to buy a property with less than 20% to 25% deposit.
The FirstBuy programme, which has been given a budget of £250million, will mean buyers will on be required to provide a 5 per cent deposit. The scheme will provide the further 20 per cent along with the builder in the form of a low-interest equity loan.
The scheme will hopefully benefit 10,000 first-time buyers although some commentators have said they have their doubts about the scheme and its usefulness to the housing market and buyers in general.
The worry is that it is not just the problem of high deposits expected by the lenders but the fact that the housing market has suffered a great deal both before and after the credit crunch due to property prices being far too high for most buyers. Many people feel that the housing market as a whole will need far more than a scheme that only benefits a very small percentage of home buyers.
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