This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Cookie Policy. Read more
Budget offers first time buyers £250m for mortgage deposits Go compare with our comparison table

Budget offers first time buyers £250m for mortgage deposits

23 March 2011 / by Rachael Stiles

The Chancellor George Osborne announced new funding to help first time buyers trying to get a mortgage in his Budget today.

Mr Osborne announced that the First Buy Scheme will see an injection of £250million into the sector, helping an estimated 10,000 first time buyers get a foot on the property ladder.

The scheme will see the Government and house builders offer loan assistance to first time buyers who need help getting a deposit together for a mortgage – they will be able to borrow money at a low interest rate to pay the deposit for newly-built homes.

Prohibitive deposits and stringent criteria have left many potential first timers disappointed in recent years, since the controversial 100 and 125 per cent mortgages which contributed to the financial crisis became outlawed, so it is hoped that the Coalition Government's new initiative will help a proportion to achieve homeownership.

Confirming the scheme in his Budget, Mr Osborne spoke of average mortgage deposits approaching 30 per cent, which, he said, "puts home ownership beyond the reach of many many families. This is not fair."

The Council of Mortgage Lenders (CML) has welcomed what it deems 'modest' support from the Government for first time buyers, but is sceptical about the scope that the funding will have on the housing market.

The measures "are unlikely to create any fundamentally different landscape for home-buyers," it said in its response to the Budget.

Peter Williams, executive director of The Intermediary Mortgage Lenders Association said he applauds any move towards helping first time buyers, who were particularly affected by the shrinking of the mortgage market, but also believes it will have little impact alone. He hopes the First Buy scheme is the first of many initiatives that the Government has up its sleeve to improve lending conditions.

"We would like to see this scheme used hand-in-hand with other initiatives, such as a review of the Stamp Duty threshold," said Mr Williams. "First-time buyers already benefit from 0% Stamp Duty on properties up to a value of £250,000, but the threshold for house movers should also be reviewed to encourage greater activity in this segment of the market."

© Fair Investment Company Limited

First Time Buyer - Mortgage Deal Selection
Sorry, your search has returned no results.

Representative Example:

A repayment mortgage of £120,000 payable over 28 years and 1 month initially on a fixed rate for 2 years at 1.99% and then on the lender current variable rate of 3.69% (variable) for the remaining 26 years and 1 month would require 24 monthly payments of £465.20 and 312 monthly payments of £565.39 and one final payment of £565.19.

The total amount payable would be £189,357.67 made up of the loan amount plus interest (£68,161.67), booking fee (£999), completion fee (£30) and valuation fee (£197).

In this example the overall cost for comparison is 3.7% APRC representative.