Help to Buy Part 2 to begin next week

House and key

The mortgage guarantee element of the Help to Buy scheme will be introduced next week, three months earlier than the originally planned January launch.

Announcing the early arrival of the scheme that sees the government part guarantee mortgages for homeowners with deposits of as little as 5%, Prime Minister David Cameron said: "I will not stand by while hard-working people struggle to get a mortgage for a house.

"That's why I am bringing forward this vital scheme."

The guarantee can be used to purchase homes up to a value of £600,000 and it is expected to help as many as 200,000 people buy a home.

Halifax, Royal Bank of Scotland and NatWest are the only lenders so far to have decided to take part in the scheme.  

While buyers will be able to apply for the mortgage guarantee from Monday 7 October, money will not change hands until 1 January 2014 so those looking to complete on home purchases before then will have to wait if they want to use the scheme.

With the Nationwide house price index showing that house prices rose in all regions of the UK for the first time in six years during the third quarter of 2013, and double-digit house price growth in London, critics of the scheme say it is unnecessary and could create a housing bubble.

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Addressing those concerns, the Prime Minister told the BBC's Andrew Marr Show: "The Bank of England (said) expressly, there isn't a bubble. The housing market is recovering, but from a low base.

"If you look at prices outside London and the South East, they're only going up by 0.8%. Talk of a housing bubble to people here in Manchester or Salford and they will literally laugh in your face."

"As Prime Minister, I'm not going to stand back while people's aspirations to get on the housing ladder, to own their own flat, to own their own home, are being trashed.

"That's why we need to act, and that's why it's good news that we're bringing forward the Help to Buy scheme, and I can tell you today that NatWest, RBS, Halifax, are all going to be putting forward these products."

Welcoming the early arrival of the mortgage guarantee, Ben Thompson, managing director of the Legal & General Mortgage Club, said: "It is clear that there are potential first-time buyers and movers who can afford to pay a new and increased mortgage monthly payment, but are having to spend significant time saving for a substantial deposit, larger than at any time in recent decades. This has to be fixed in order that families can live in suitable accommodation and enjoy home ownership in the same way that previous generations have."

He added: "Also, bringing the scheme forward potentially enables some to buy or move a few months earlier than originally planned, in some regions saving a little more money, as house prices in some parts are climbing. It's therefore important not to leave this too late."