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First time buyer scheme kicks off

First time buyer scheme kicks off

Category: Mortgages

Updated: 20/06/2011
First Published: 20/06/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A new first time buyer scheme has been launched, with the aim of offering 'an alternative to the Bank of Mum and Dad'.

First time buyers have struggled to get a footing on the property ladder since the market crashed in 2007, as lenders made it more difficult to borrow unless people had large deposits.

The new FirstBuy scheme has been designed specifically to help wannabe buyers in such a position.

Buyers will only need to muster up a 5% deposit, which will be topped up by the Government and housebuilders by another 20%.

These loans will only have to be paid back when the home is resold.

First time buyers will then be allowed to take out a 75% loan-to-value mortgage to buy the rest of the property.

It is hoped that more than 10,000 new homeowners will benefit from the scheme over the next two years, with up to £500 million being made available.

A number of key lenders have signed up to take part in the scheme, including Halifax, Nationwide and Barclays, while more than 100 housebuilders will take part by offering their new build homes to first time buyers.

"With 80% of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder," said Grant Shapps, Housing Minister.

"FirstBuy will do just that - a Government-backed scheme making £500 million available to offer a valuable alternative to the Bank of Mum and Dad.

"Over the next two years, this will help as many as 10,000 people in England to get that much-needed deposit together and realise their dreams of owning their own home.

"And because this help will be available on newly-built properties, it will also offer a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country."

Find the best mortgage for your first home - Compare first time buyer mortgages

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