Best Loans News

First time buyers have now been struggling to get their feet on the housing ladder for some time now and this is largely due to the restrictions placed on home owner loans by banks and building societies with regard to maximum loan to value ratios.

In his budget speech yesterday (23rd march) the Chancellor, George Osbourne announced a new government scheme to help first time buyers get the loan they require and buy a home, rather than being forced to continue renting a property.

The loan scheme is available to first time buyers who are buying a new property and have a joint income of less than £60,000 per year and will be run by the government in association with house building companies.

The government have pledged £250 million to fund the scheme, which they intend to raise from the increased levy on the banking sector.

If a first time buyer is able to raise a deposit of just 5 per cent towards the property value, the government will offer a loan of up to 20 per cent of the value of the house, thereby allowing first time buyers to obtain a cheap loan deal from a lender at 75 per cent loan to value, rather than having to pay the premium on a 95 per cent loan to value deal.

These government loans will not attract any interest for the first five years of the term and will only have to be repaid in full once the property is sold. They will take the form of an equity loan, with 10 per cent being provided by the government and 10 per cent being provided by the house builder.

Mr Osbourne said “Average mortgage deposits are close to 30 per cent, putting home ownership beyond the reach of many families. That is not fair.”