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NewBuy scheme ‘open for business’

NewBuy scheme ‘open for business’

Category: Mortgages

Updated: 17/12/2012
First Published: 12/03/2012

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People looking to buy a home in England have been handed a boost after the Housing Minister Grant Shapps declared the NewBuy scheme 'open for business'.

It is estimated that around 100,000 prospective and existing homeowners will be helped to buy properties with much smaller deposits than would currently be required.

The scheme will also give a much needed boost to housebuilders and the economy, the Department for Communities and Local Government (DCLG) said.

Some 50,000 jobs will be created as a result of the house building programme.

The Home Builders Federation is backing the scheme, as is the Council of Mortgage Lenders (CML), while the DCLG said that it has attracted 'many of the country's biggest house-builders and mortgage lenders'.

It has been confirmed that Barclays, Nationwide and NatWest will be offering fixed rate mortgages of between two and five years.

The deal will mean that instead of a typical buyer requiring a £40,000 deposit for a £200,000 property, they will now only need £10,000.

It is estimated that one million people, including 380,000 aspiring first time buyers, can afford mortgage payments, but are currently unable to buy because they cannot raise the necessary deposit.

The Government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.

"We are delighted that three lenders are today launching mortgages under NewBuy, and that more are set to follow," said Paul Smee, executive director of the House Builders Federation.

"These mortgages will help creditworthy borrowers who simply haven't yet managed to build up a large enough deposit to gain access to finance to buy a newly built home.

"NewBuy is good news for home-buyers, and potentially good news for jobs and the wider economy too."

Meanwhile, Mr Shapps has also announced an expansion of the Right to Buy scheme which allows council tenants to buy their homes.

Up to two million social tenants are to be given the opportunity to buy their council homes with a discount of up to £75,000.

In addition, any homes that are sold will be replaced with new affordable homes to rent.

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