The government recently announced a new scheme to help first-time buyers.
FirstBuy will allow people to take out a mortgage for just 75% of the cost of the property, provided they can fund a 5% deposit. the major lenders will be offering mortgages to those who qualify.
It is however, limited to new build properties and there is a limited pot of money, so demand is likely to exceed supply. More than 100 housebuilders will take part by offering their properties to first-time buyers. At PLS Solicitors our residential conveyancing solicitors are used to acting for many purchasers of new build properties and are frequently referred into clients by developers due to our residential conveyancing solicitors indepth knowledge of the new build market. A large reason for our in depth knowledge is because we have also acted for the developers on the other side of the fence please refer to our Conveyancing Services for Developers Looking to Develop Residential Property page for details.
The lenders will be offering specially designed 75% loan-to-value (LTV) mortgages.
FirstBuy will be open to those with a household income of less than £60,000 a year who can put down a 5% deposit .
Those who qualify will be eligible for an “equity loan” worth up to 20% of the value of the property, jointly funded by the government and housebuilders on a 50/50 basis. That means buyers would be able to take out a 75% mortgage for the remainder.
The equity loan will be interest-free for the first five years. At the start of year six, an annual fee of 1.75% will be levied on the equity loan, and this fee will then rise by retail prices index (RPI) inflation plus 1% after that.
The equity loan will need to be paid back in full after 25 years or when the property is sold.
The amount you paid back will stay at 20% of the market value at the time of the sale.
The maximum property price that will normally be considered is £280,000.
The government had made up to £250m available over the next two years for the scheme.
FirstBuy is similar to the HomeBuy Direct scheme, although the equity loan available is slightly smaller.
Anyone interested should register their interest in the scheme by contacting their local HomeBuy agent.
Please feel free to contact one of our conveyancing solicitors today in our new build property team should require further details.
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