Help to Buy mortgage guarantees
The Help to Buy mortgage guarantee is in addition to the Help to Buy equity loan scheme launched earlier this year. Since April there have been 7500 reservations of properties under the scheme which demonstrates a notable success in the uptake and properties.
The soon to be introduced mortgage guarantee scheme is similar to the equity loan scheme in the sense you can purchase a home with only a 5% of the purchase price deposit. The schemes differ in a few key ways however as the equity loans are only intended for new homes to be built or recently built whereas the mortgage guarantee scheme is available on new and existing (second hand homes).
The other key difference is that the mortgage guarantee is aimed at increasing the availability of high loan-to-value mortgages by offering a government guarantee to lenders as opposed to the equity loan to the prospective purchaser.
The Help to Buy mortgage guarantee will provide the government guarantee to those lenders who agree to make available mortgage products to purchasers with a deposit of between 5% and 20%.
The Help to Buy mortgage guarantee scheme will be open to existing homeowners and first time buyers however will not cover second homes. As mentioned the properties can be new or existing homes with a value of up to £600,000.
The Help to Buy mortgage guarantee scheme will be launching on 1st January 2014, the details of the scheme are eagerly awaited by many prospective purchasers with further clarification on how the scheme will work to be provided later in the year.