Advertisement

  1. ITV Report

Help to Buy: What the Budget means for house buyers and mortgages

New homes being built in Kent. Photo: PA

The 2013 Budget included two key announcements under the title 'Help to Buy' for people looking to buy houses.

Both schemes are available to first time buyers and existing homeowners and are applicable to properties worth up to £600,000.

In both cases, buyers must provide at least a 5% deposit without any help from the Government.

1. The First Buy scheme will be extended to provide an interest-free equity loan of up to 20% on new-build homes.

This begins on 1st April 2013 for three years and there is no limit on how much you earn to qualify.

How the Treasury's Help to Buy equity loan would work. Credit: Treasury

2. A new mortgage guarantee, sufficient to support £130bn worth of loans, will be introduced to help people who cannot afford a big deposit.

This is applicable to first-time buyers and home movers and is not limited to new-build houses.

The scheme is available from January 2014 for three years.

How the Treasury's Help to Buy mortgage guarantee would work. Credit: Treasury

How do I apply?

In the case of the mortgage guarantee, buyers will still have to apply to commercial mortgage lenders, who have been guaranteed billions by the Government to make more loans to consumers.

The first of the measures to be implemented is the equity loan scheme in April 2013 - contact participating house builders or see the Government's HomeBuy page to see available programmes in your area.

More details on the mortgage guarantee scheme - to begin in January 2014 - will be released later this year.

The measures don't come in until 2013 and 2014 - should I put off buying until then?

As Sue Anderson from the Council of Mortgage Lenders (CML) says, the announcement itself isn't a reason to wait if you're considering buying now. The scheme should increase the availability of mortgages rather than necessarily tipping the transaction cost in the way that a stamp duty change might.

In fact, if you're looking to buy now to benefit from increases in house prices later, putting off a purchase could be a costly decision.

Existing Government schemes such as New Buy and First Buy are available now.

More on this story