Why NewBuy could mean goodbye to savings stress in 2013

December 14, 2012 at 2:08 PM 1 comment

As any would-be first-time buyer (FTB) knows who has spent five minutes with a calculator working out how much they need to save, affording a home is hard.

So hard, in fact, that the Government stepped in earlier this year March, launching NewBuy, the latest scheme to help people ease their way onto the housing ladder. It aims to lower the amount of money required for a deposit up to the value of £500,000 (if you are buying a newbuild home), achieved by the Government and developers putting a percentage of the property’s value into a mortgage indemnity pot. This frees up lenders to loan more money – as much as 95 per cent of the sale price of the property.

So for a £200,000 property, the minimum deposit required is £10,000, a third less than you’d need if you bought without the Newbuy scheme. Not only that, but according to Adrian MacDiarmid, Barratt Homes’ head of mortgage lender relations, you’ll be able to borrow at a better rate, starting at around 4.5 per cent.

The stated aim of the Government is for 100,000 people to be hiring the removal men by 2015. Barratt Homes, reports it has sold 450 homes this way since March, which represents 10 per cent of its private sales.

So far 30 developers, including Barratt Homes, City & Country, Taylor Wimpey and Persimmon, and six lenders, including Barclays, Nat West and Nationwide (people buying through Newbuy will have to gain an accredited mortgage) are signed up to the scheme, which is available across the country.

It’s not just FTBs moving this way either; other buyers are eligible and there is no salary cap, provided the property they are buying is their main home (rather than a holiday or buy-to-let property) and fully owned (so not shared equity). According to Barratt Homes, some of those signing up to the scheme include people who have recently divorced or separated, those who are moving job to a different part of the country or people who just want a bigger home or to be in a better area.

Homes where the NewBuy scheme is applicable:

2 bedroom new flat for sale £224,995

Cannons Wharf, Medway Wharf Road, Tonbridge TN9

Cannons Wharf

4 bedroom detached new house for sale From £214,995

Grosvenor Park, Dodworth Road, Barnsley S70

GrosvenorpPk

Browse other new homes participating in the NewBuy scheme here

Entry filed under: Buying & Selling, First Time Buyers. Tags: .

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1 Comment Add your own

  • 1. Simon Richards  |  December 14, 2012 at 2:23 PM

    Have you looked at the resale stats for buyers who purchased with NewBuy 12 months ago and now want to sell for various reasons seperation, loss of job etc. The resale price has to be higher than the same property being sold on site by the developer, the price in real terms has fallen since purchase, the developer/government contribution has to be repaid from the sale proceeds and this puts the sellers in negative equity, the scheme has its drawbacks for sure, their is a good reason why a deposit of 15% is advisable, and this is why 100% + LTV schemes were withdrawn, at least the N Rock product for all its criticism only lent secured at 90% LTV the remainder was unsecured and could be rearranged after a sale and not repaid.

    Reply

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