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On 12 March 2012 the Government announced the introduction of
the New Buy Scheme which assists buyers who have a deposit of at
least 5% to purchase a newbuild property.
The effect of this scheme is that it will make available to
buyers the possibility of securing 95% Loan to Value mortgages on
newbuild houses and flats.
In order to be eligible for the New Buy Scheme then a buyer must
purchase a newbuild property in England, the price of the property
must be less than Ł500,000, it cannot be a shared equity
property, it cannot be a buy to let property and the buyer must be
a UK citizen.
The Scheme works in that a housebuilder will put 3.5% of the
sale price into an indemnity fund for each property sold through
the Scheme and the Government will provide 5.5% guarantee. If then
the property is repossessed the lender will be able to recover from
these funds.
The benefits of the new Scheme are that the buyer is able to
gain access to greater levels of borrowing, the lender has greater
protection, the builder is able to sell its properties and the
Government can encourage the supply of more homes.
At the time of writing Barclays, Nationwide and Natwest are
lenders which are part of this scheme.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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