More Help For First Time Buyers
There was some good news, earlier this week, for those individuals who have been trying to get their feet onto the first rung of the housing ladder, as the Government eventually announced its plans to help the mortgage loan and housing market, which included new incentives specifically aimed at providing assistance for first time buyers.
Apart from announcing plans to provide funding for a new wave of shared ownership housing schemes, Alistair Darling finally raised the starting amount for stamp duty to £175,000 from £125,000, which will save the majority of first time buyers up to £1,750 in tax on the purchase of a new property.
There is also more help on its way, as the Skipton Building Society has just announced plans to return to the 95 per cent loan to value market for first time buyers looking for their first mortgage or home loan. The new scheme, known as “mutually exclusive”, is designed to reward families who manage to save with the society in return for a high loan to value without any higher lending charges.
To qualify for the 95 per cent loan to value, a potential borrower’s parents must deposit savings with the Skipton equivalent to 20 per cent of the purchase price of the property. The lender will then take a charge on these funds as security for the loan, paying interest until the loan is repaid, or a sufficient amount of equity has grown on the house.
Steve Haggerty of the Skipton said “First time buyers are the life-blood of the market, without them it cannot operate properly. This is a substantive move to help first time buyers, who have been failed by recent Government announcements. Mutually exclusive rewards membership and reflects a link between savings and lending that has been missing from the market for too long.”
This is all very well of course, but as the parents will lose access to their money under this scheme anyway, as it is used as loan security, surely it would be more beneficial for the whole family to help their children by simply using the cash to provide a larger deposit for the purchase and reducing the overall amount of the mortgage loan, thereby saving their children interest payments and increasing their level of affordability…just a thought!
