A 5% deposit could make you a homeowner
1st December 2011
First time buyers are being offered a life-line by the government in a new scheme which could see them pay as little as 5% for a deposit on a property.
However, you might have to wait until you are 40 or over before you can enjoy the specific thrills of paying a mortgage.
Experts from the affordable housing scheme, Pocket Living, warm that the average first time buyer could be 40 before the end of the decade. The average age of a first time buyer still continues to rise. According to a government report, in the mid 1970s the average age was 26 compared to 30 and above since 2000.
The UK is currently experiencing a housing crisis and the government has noticed that the problems people are facing are “stark.”
David Cameron and Nick Clegg stated that; “We have not built enough new homes for more than a generation and the impact of the credit crunch has simply compounded this challenge.”
However, under the new scheme, that could all be about to change.
First time buyers can put down a 5% deposit and have a mortgage made up of 95% of the loan to value. Gone are the days of hefty deposits, reluctant lenders and record rent prices. The new government scheme will create thousands of new properties, thousands of new jobs and could benefit the economy significantly.
This ambitious plan will see up to 170,000 houses built through the affordable homes programme along with an additional 100,000 through the release of public-sector land.
On top of that, a further 100,000 properties will be available at discount rates under the introduction of the Right to Buy scheme. If you are thinking of purchasing a new property, you will need home insurance.
Despite all the housing high hopes, the government is essentially underwriting mortgages for those with small deposits. If the 100,000 young buyers who are successful with a 5% deposit fail to keep up with mortgage repayments, this could cost the taxpayer millions of pounds.
Grant Shapps, the Housing Minister insists that they are “not going back to the bad old ways.”
“These mortgages will be assessed on the very tough criteria used for other home loans,” he continued.
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