The second phase of the Government's £12 billion Help to Buy scheme is being launched by Prime Minister David Cameron today.
An earlier phase of the scheme, offering 20% loans on new-build properties, has already helped more than 15,000 people buy a new home since it was launched six months ago.
But some critics fear it could fuel further rise in a housing market where prices are already rising.
How does 'Help to Buy' work?
- Help to Buy is intended to help first time home buyers get on the housing ladder with deposits from as little as five per cent.
- Under the new scheme, leading banks will offer a range of new Help to Buy mortgages - up to 95 per cent of the property's value - for homes worth up to £600,000.
- Depending on the size of deposit, the government will then guarantee up to 15 per cent of the property's value, in return for a fee from the lender.
- Lenders can start offering the mortgages from today, and they will be guaranteed by the Government from January 2014.
In order for your mortgage to be eligible for the scheme:
- It must be a residential mortgage, so you will be planning to live in your house and not rent it out.
- The property you want to buy must be in the UK and the purchase value must be £600,000 or less.
- The mortgage must be taken out on a repayment basis, rather than interest-only.
- It must be to buy your only property, so you cannot have an interest in any property, anywhere in the world.
- The mortgage cannot be for an equity loan or shared ownership purchase.
Which lenders are taking part?
- Royal Bank of Scotland and NatWest are offering two- and five-year fixed rate deals at 4.99% and 5.49% interest rates with no fee. Customers can apply from tomorrow.
- Halifax will also start taking applications this week.
- HSBC has also signed up and these mortgages will be available later this year.
- Virgin Money will also take part in the scheme from January.
How to apply
Further information on making applications for the three lender's Help to Buy schemes that will become available this week can be found as follows: