Right Estate Agents report that an interest-free loan of almost £40,000 from the Government is being given to 30 borrowers a day to help them buy a new home.
The loan is being issued under the Government’s Help to Buy equity loan scheme, launched in April.
The scheme helped 5,375 buyers during the first six months, according to the official figures issued today by Communities and Local Government.
Participants bought properties with an average value of £194,164, more than £20,000 higher than the average price of a home. The average equity loan was £38,703.
The majority of homes bought as part of the equity loan scheme were made by first-time buyers, totalling 92 per cent.
The Help to Buy scheme was announced by the Chancellor in this year’s Budget and has two parts – equity loan and mortgage guarantee.
Under the equity loan scheme, the Government provides a loan of up to 20 per cent of the value of a new build home, interest free for the first five years. Borrowers provide a 5 per cent deposit and a mortgage of 75 per cent.
In the sixth year, borrowers will be charged a fee of 1.75 per cent of the loan’s value, after which the fee increases every year. The increase is based on the Retail Prices Index, plus 1 per cent.
The scheme is only available on new build properties.
Under the new mortgage guarantee scheme, the buyer also only needs a 5 per cent deposit.
The Government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender.
If you would like some assistance with your house move, please call your local Right Estate Agents Branch Manager on 0845 026 8527