Milne Moser Solicitors has welcomed the government’s announcement of Your First Home, a new equity loan scheme aimed at helping more first time buyers in England buy their first home.
Announced by the Ministry of Housing, Communities and Local Government on 26th September, the scheme is expected to allow eligible first time buyers to purchase a new build home with a deposit of just 2.5%. The rest of the deposit gap will be covered by a government backed equity loan worth 20% of the purchase price, with an initial interest free period that the government says could save buyers hundreds of pounds a month compared with a 95% mortgage.
The scheme will apply to new build homes bought from developers that have signed up to it. A household income cap and local property price caps will also be introduced to make sure help goes to those who need it most. The Chancellor is expected to confirm the full details, including costs, eligibility and when the scheme will open, at next month’s Budget.
The government has also described the scheme as a boost for the new build market, which is under pressure from rising construction costs and wider economic conditions. Developers will be expected to make a contribution when they sign up.
Stephen Greenwood, Head of Residential Property at Milne Moser Solicitors, said:
“For a lot of first time buyers, the deposit is the thing that stops them in their tracks. You can have a steady job and pay more in rent each month than a mortgage would cost, yet still be years away from saving enough. Bringing that figure down to 2.5% could make a real difference, particularly for young people who want to stay in the area they grew up in.
It is worth going in with your eyes open, though. An equity loan is not free money. At some point interest will start to be charged and the loan will need to be paid back, usually when you sell or remortgage. Buying a new build also has its own quirks, so the earlier you speak to a conveyancer the better.
We will be keeping a close eye on the detail when it comes out at the Budget. In the meantime, anyone who is thinking about it is very welcome to give us a call for a chat.”
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