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Published: March 3, 2021
Are you a first time homebuyer and been struggling to purchase your first home because of a low deposit, then now may be the time to buy.
Chancellor Rishi Sunak’s has just released details about the new 5% mortgage guarantee scheme in the 2021 budget. The new initiative will come into affect from April 2021 and is available to first time buyers and also current homeowners looking to buy a house up to £600.000. The aim of the scheme is to solve the problem of higher-LTV mortgages disappearing from the market.
The past year has been especially hard for new home buyers, due to COVID-19 with many mortgage lenders asking for a 15% deposit. So the release of the new scheme will be welcomed news for first time buyers looking to take their first step in buying their first home who from next month can take advantage of the new 95% mortgage scheme.
All lenders under the new scheme who offer the government backed 5% mortgage guarantee will offer mortgages fixed for at least five years.
The new initiative is similar to the 2013 help to buy mortgage scheme which was launched in 2013 to help boost the housing market after the 2008 financial crisis, and also allowed a 5% deposit which helped thousands of households across the UK to buy a new home.
How much deposit do you need under the new government scheme?
For example if you are looking to purchase a property worth £200,000 under the 5% deposit scheme you will now need to have a deposit of £10,000 whereas before first time buyers would have needed 10-15% deposit meaning they would have needed a minimum deposit of £20,000.
Is now the time to buy for first time buyers?
If you are a first time buyer, and have been struggling to buy your first home due to a low deposit then from next month would be a great time to take advantage of getting onto the property ladder under the government backed scheme.