New scheme launched by Prime Minister offers 100,000 new build homes to first time buyers with 20% discount but affordable homes suffer.
The Prime Minister has launched the Starter Home initiative to help young people under the age of 40 the opportunity to buy their first home with a 20% discount.
First time buyers struggling to buy can apply for the scheme from January 2015 which will make available 100,000 new build homes on under-used brownfield sites.
The initiative follows the government Help to Buy scheme to assist homebuyers buy their properties. For a home costing £200,000 a first time buyer can save £40,000 and need a smaller deposit and mortgage from a lender.
Affordable housing to suffer
To pay for the Starter Home initiative changes must be made to the regulations such as Section 106 requiring developers to provide a proportion of a project for affordable housing.
This costs the developer an average of £15,000 per new build home. Under the rules developers of brownfield sites for Starter Homes are exempt from Section 106 charges and Community Infrastructure Levy charges.
Starter Homes would not be resold at market value for a fixed period of time to ensure the savings are passed onto the homebuyers.
Already more than 30 developers have expressed support for the initiative and would be interested in allocating land the discounted properties.
Using a Help to Buy mortgage
Help to Buy is in two parts, one called equity loan where the government offers a 20% interest free loan of the property value for new build properties. With a 5% deposit the balance of 75% would be a mortgage from a lender.
The other is a mortgage guarantee scheme where the government guarantees the lender 15% of the property value instead of giving you a loan.
This option is for first time buyers and home movers for both new-build and existing homes requiring a 5% and the balance of 95% would be a mortgage from a lender.
The Help to Buy scheme is not available for buy-to-let investors or remortgage buyers.
Using the Starter Home initiative a first time buyer under age 40 would benefit from a 20% discount on the property value and with an equity loan Help to Buy mortgage receive an interest free loan making it even more affordable to buy their first home.
Help for first time buyers can come from family members as the equity release buyer can access wealth using a lifetime mortgage for the deposit on their first home.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even buy a more expensive home.
Learn more by using the property value tracker chart, mortgage cost calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
