£400 Million for Shared Equity Mortgage Schemes

First Time buyers are to be given a helping had to the tune of £400m towards Shared Equity Mortgage Schemes. The amount promised by the Government has risen from £300m in September 2008. Housing Minister Margaret Beckett stated that the Government are determined to provide “real help” for families in the current difficult economic climate.

The scheme is designed to assist households with incomes below £60,000 buy a brand new home.  A deposit of up to 30% will be made available via a Shared Equity Mortgage Loans, funded partly by the Government and the Developer, a mortgage will be raised for the remaining share. The loan will be free of charge for five years.

Many developers offer a version of the scheme already, known as New Build Shared Equity Mortgages, and more than 130 developers have agreed to take part in the new initiative. It is no surprise that the house building industry was one of the first to be affected by the economic climate. The scheme’s support will undoubtedly be welcomed by developers and their employees and prevent job losses.

Mrs Beckett said: “For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder.” She added: “This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going.”

First Time buyers who prove eligible will be able to apply for the scheme as early as the first quarter 2009.

But the Royal Institution of Chartered Surveyors (Rics) warned that the scheme would only be successful if the banks gave out mortgages to applicants for the scheme.”

The attitude of mortgage lenders will determine if the scheme is a success and to work effectively the major lenders must be prepared to give people mortgages to buy their share of the property,” said James Rowlands, Rics policy officer.True, but as many lenders have been lending on a version of this scheme since the late 1980’s,  as well as shared ownership mortgage schemes, it would appear that they do have the right attitude, they would be foolish to ignore what will become the “norm” for first time buyer borrowing.If you want to know more about shared owenrship & equity mortgage schemes, then contact Click n go Mortgages here.