First Buy Loan Scheme Launched June 21st, 2011
Ever since the credit crunch hit the UK, first time buyers have been struggling to get themselves onto the housing and home owner loan market, as banks and building societies have restricted lending criteria and lowered the maximum loan to values they offer.
In recent months, around 85 per cent of all first time buyers have depended on financial help from their parents or other family members, with either the deposit, or as a guarantor for the loan repayments.
But a new scheme has now been launched by the Government in connection with several house building firms, which is designed to help first time buyers get onto the housing and home owner loan market without depending on parental help.
The FirstBuy scheme will offer a secured loan to first time buyers which is equivalent to 20 per cent of the purchase price, if the buyer can provide a deposit themselves of just 5 per cent.
This will allow first time buyers to take out a cheap loan at just 75 per cent loan to value, rather than being limited to the few expensive and restrictive 90 or 95 per cent deals which some lenders offer. The loans will only have to be repaid when the house is eventually sold.
The secured loans will be provided partly by the Government and partly by the building firm. £500 million is being made available for the loan scheme over the course of the next two years and this is expected to help somewhere in the region of 10,000 first time buyers.
The Housing Minister, Grant Shapps said “Over the next two years, this will help as many as 10,000 people in England to get that much needed deposit together and realise their dreams of owning their own home.”
“And because this help will be available on newly built properties, it will also offer a much needed boost to our housebuilding industry, supporting thousands of jobs across the country.”