Why NewBuy could mean goodbye to savings stress in 2013

December 14, 2012 at 2:08 PM Lawrence Hall Leave a 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.