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What is the new Mortgage Guarantee Scheme, what does it mean for you and when does it come into place?
In yesterday’s Spring Budget, the Chancellor announced a new mortgage guarantee scheme to encourage the next generation to become ‘generation buy’. The offering will enable first-time buyers and homeowners to secure a mortgage with a 5% deposit on a property of up to £600,000. The government will incentivise lenders to provide mortgages up to 95% loan to value by introducing a government backed mortgage guarantee scheme.
The biggest difference from the last Help to Buy scheme is that it will not be restricted to first time buyers. It also won’t be restricted to new build homes, instead buyers will be able to look at any property that goes on the market within their budget, even as a current homeowner. Youngsters who would once only dream of owning their own property may actually be able to do so now, and this added to the continued break in stamp duty, means that those families who are in desperate need for a bit more space may indeed just be able to find their next dream home.
Obviously, the Chancellor has done this for a very good reason; the economy in general will be helped by getting the market moving again and returning confidence to lenders, especially of the younger generations, in such unprecedented times.
With Mr Sunak confirming that most of the countries largest lenders are on board with the offer of a 95% mortgage, this means that we can now offer more clients the opportunity to get on the housing ladder whilst maintaining a broad range of providers to choose from.
The scheme becomes available to lenders from April 2021. All lenders under the scheme will offer mortgages fixed for at least five years which, according to the Treasury, will provide options for those with smaller deposits who want the security of a mortgage with a fixed rate over a longer term.
David Allen Financial Services has two independent mortgage advisers, Kelly Hillier and Donna Wilson, who welcome enquiries from anyone looking to ascertain how much they can borrow. Whether you live with your parents, currently rent or are a homeowner thinking of putting their home on the market, our advisers are independent which means we can access the whole of the market and therefore look at getting you an ‘agreement in principle’ and ultimately guide you through the homebuying process.
Contact our advisers here.
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