The Government's Help to Buy Scheme: The Facts
Thursday, 02 May 2013
After years of uncertainty in the housing market, last month the government announced the launch of a new scheme, Help to Buy, aimed at helping people get a foot onto the elusive property ladder.
The first part of the scheme, which came into effect at the start of April, gives those buying a new-build home access to a government loan worth up to 20% of the property's value, to supplement a mortgage. The loan is interest free for 5 years and doesn't need to be repaid until the house is sold.
The second part of the scheme, due to be introduced in January 2014, involves the government guaranteeing a portion of a buyer's mortgage, as long as the buyer can come up with a 5% deposit - this applies to those buying regular properties as well as new-builds. The hope is that by guaranteeing the mortgages, the government can encourage previously reluctant banks to lend to those struggling to buy their first home.
However, first time buyers aren't the only ones who potentially stand to benefit from the scheme. One of its aims is to revitalise the housing market in general, and this seems to have been backed up by figures from a recent poll by property agent Knight Frank and Markit Economics that indicated a sense of optimism from homeowners, with 11% responding that they felt the value of their house had risen over the past month.
With more buyers able to get access to mortgages and homeowners showing a small (but significant) increase in confidence, industry experts are hopeful that we could see a revival in the property market to somewhere approaching pre-2010 levels in the next year.
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