A controversial new government scheme that allows UK homebuyers to take out 95 per cent mortgages will launch three months earlier than expected. Help to Buy will go live next week, aiming to help UK property buyers acquire their first homes.
Prime Minister David Cameron announced that the scheme comes into effect in the next week at the Conservative Party’s annual conference in Manchester. The scheme will make it easier for British buyers to finance property purchases.
First-time property buyers face a number of challenges when buying a home, with a lending market that’s risk averse due to financial history and growing home pricing in many parts of the country, particularly major centres such as London.
The scheme has been criticised as fuelling a housing bubble, but the government has bet on it improving market conditions for hundreds of thousands of first-time home shoppers looking to acquire their own property.
Analysts believe that the scheme will result in a housing price surge, as customers now have access to an incredible level of financial support. The scheme will allow some customers to take out mortgages for up to 95 per cent of their home’s cost.
Several financial firms have not yet announced whether they will take part in the government’s scheme, further fuelling criticism of the plan. Santander, HSBC, and Barclays have yet to confirm any involvement in the home financing scheme.
As well as confirming that the Help to Buy scheme will launch early, Mr Cameron confirmed that he would not seek to implement a ‘mansion tax’ on homeowners in large properties – a policy that’s a key component of Lib Dem campaigning.
The government will provide equity loans for homebuyers of up to 20 per cent of the cost of their properties. Buyers will only need to put down 5 percent of their home’s cost in the form of a deposit.
