FIRST-TIME BUYER SCHEME
This scheme enables first-time buyers to effectively take out a 75% mortgage, with a 5% deposit. To qualify, your household income must be less than £60,000 a year. You can then apply to receive a loan of up to 20% of the value of the property, providing you can put down 5%. The loan is jointly funded by the government and housebuilders.
The loan is interest free for the first five years, after which an annual fee of 1.75% will be levied. This will then rise by the retail prices index measure of inflation plus 1%. On the sale of the home or after 25 years, you’ll repay 20% of the value to the loan provider.
LOCAL AUTHORITY MORTGAGES
Local Authority mortgages were launched by Sector Treasury Services in March 2011. Backed by Lloyds TSB, they involve local authorities topping up first-time-buyer deposits.
Participating councils will help fund up to 20% of the first-time buyer’s mortgage by placing funds with the lender.
MORTGAGE INDEMNITY SCHEME
The government’s latest attempt to rescue the housing market will see it provide guarantees to lenders to encourage them to lend. The scheme, which applies to newbuilds, will mean buyers will be able to borrow 95% of the property value, at no added risk to the lender, as the government will act as guarantor.