Various mortgage lenders are now part of the Newbuy scheme that offers mortgages of up to 95% on new houses. The scheme aims to help buyers who find it impossible to save the large deposit now required by many lenders.. It should also increase the number of new houses being built because developers will be more confident that mortgage offers will be made to prospective purchasers.
The scheme only applies to new build property in England and the builder must be part of the Newbuy scheme. The price needs to be no more than £500,000 and the property must be a main home. Landlord insurance clients will find that it cannot be used to finance properties that will be let out. If you are a UK citizen or have indefinite leaven to remain in the UK you might find that the Newbuy scheme could help you buy a house with a deposit of between 5 and 10%.
The Government and some house builders have agreed to cover a limited amount of losses if borrowers default and the home is sold for less than the mortgage. This means that lenders are more willing to advance loans representing a larger percentage of the houses value.
Anyone thinking about taking out a mortgage should take proper advice and needs to understand that if their home is repossessed they will be responsible for the shortfall between the sale proceeds and the mortgage debt. This is the case with all mortgages but of course if the loan is a very high percentage of the value a small fall in house prices could put the owner into negative equity.