If the answer is yes and you do have a 5% deposit for a new build house then the NewBuy Scheme could be for you.
We are all aware that there has been a shortage in mortgage finance and the NewBuy Scheme is going some way to providing some welcome assistance. Since the credit crunch a 5% deposit has been considered inadequate in respect of obtaining a mortgage but the NewBuy Scheme will allow those with a 5% deposit to obtain funding and also to have access to some of the more favourable borrowing rates available to those with larger deposits.
If you have a deposit of 5% or more and want to buy a new build home then you may qualify for lending under the NewBuy Scheme. If you can satisfy the following conditions then you will be eligible:-
- The property you are purchasing must be a new build property in England and must have been constructed by a builder participating in the scheme.
- The price of the property must be less than £500,000.
- The purchase must be a standard purchase (not shared equity or shared ownership) and the property must be the applicant’s main home.
- The applicants must be UK citizens.
How it works…
If you are eligible under the Scheme then the house builder will put 3.5% of the purchase price in to an indemnity fund for each house or flat sold through the scheme. The Government then also provides additional security for the mortgage in the form of guarantee of 5.5% of the purchase price.
This provides protection for the lender if they have to repossess and sell the property as such action could potentially lead to a substantial loss for the lender. As they have the benefit of this protection, they are more willing to lend to those who only have a 5% deposit.
Nationwide, Natwest and Barclays have already signed up to the Scheme with more expected to follow.
Buying a new home?
Get in touch with the team at Talbot Walker for all your home buying legal needs. Call t: 01264 721783 and speak to our Head of Residential Conveyancing Solicitor, Louise Campbell. Alternatively you can email Louise at e: firstname.lastname@example.org