Question: I left university five years ago and I have been paying off my student loan ever since so haven't been able to build up savings, even though my salary is good. My parents have recently split up and can't give me a handout. I have seen a flat quite near to my work but it is not new-build. I can probably raise about 12 per cent of the purchase price but is there any further help I can get?
Answer: You are just the sort of person that the latest government schemes are intended to help, in that you have a good salary and should be able to pay a mortgage but your deposit is smaller than most lenders would require they are likey to want 20 per cent.
In this year's Budget, Chancellor George Osborne announced the Help to Buy schemes. The first was the equity loan scheme which launched in April and basically enabled buyers of new-build properties worth up to £600,000 to borrow up to 20 per cent of the value of the property as an interest-free loan for five years.
The second scheme, the mortgage guarantee scheme, was due to start in January next year but is launching next week. Under this scheme a buyer needs a minimum deposit of five per cent and can buy a new-build or an existing property, provided the value is less than £600,000.
The scheme is not available for buy to lets or second homes, or to buyers who do not have a good credit record. The Government guarantees up to 15 per cent of the property value in return for the lender paying a fee.
Accordingly, more high loan to value mortgages should become available because the Government is basically giving a guarantee/insurance to lenders that offer mortgages to people who can raise deposits of between five and 20 per cent.
This means that provided the flat you want is under £600,000 you may very well benefit from the Help to Buy mortgage guarantee scheme.
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