New scheme allows mortgages with 5% deposit

buying a property

buying a propertyHave you been trying to get that all-important first foot on the property ladder recently but have been finding it tough going?

Young families across the country have struggled to access mortgages since the financial crisis hit the UK, as a result of frustratingly high deposits and typically tight lending criteria.

But now a new scheme has been launched in a bid to support prospective home buyers who are in need of such support.

The NewBuy Guarantee scheme is designed to help up to 100,000 people and should give them the chance to invest in a new-build home if they have a deposit of just 5% or 10%.

At present, mainstream lenders typically require people to have deposits of 20% or even greater.

Home movers will also be able to take advantage of the scheme in addition to those trying to clamber on to the property ladder for the first time in their lives.

The Home Builders Federation and the Council of Mortgage Lenders (CML) are behind the new initiative, which could see the Government guarantee 5.5% of the purchase price of a home, and developers contribute a further 3.5%.

A CML spokesperson said: "We are anticipating a number of lenders are working on plans to support the scheme. There is lender support and interest in the scheme.

"This is part of a wider approach to stimulating demand in the economy and it is part of a growth package and a series of measures."

Read this guide to learn more about the mortgage selection process.