The UK mortgage and housing markets have seen a lack mortgages being available since 2008 preventing many from buying their own homes or moving up the housing ladder. One of the difficulties to purchasing a property is saving up a deposit or building up equity in an existing home.

The Government have launched a number of initiatives to help people to buy their own homes. The Government’s Help to Buy scheme has been designed to help borrowers who wish to purchase a property and only have a small deposit. The scheme falls into two parts: an ‘equity loan’ and a type of insurance for mortgage lenders to help them offer more mortgages to people with small deposits.

A number of high-street lenders are not offering loans for new-build properties through the mortgage guarantee part of Help to Buy, highlighting the increasingly complex relationship between the two halves of the government scheme and raising questions about its impact on the UK residential property market.

Both parts of the scheme encourage first-time buyers to join the market by allowing them to obtain mortgages for properties worth up to £600,000 with a deposit of only 5 per cent.

The first, shared-equity part of Help to Buy is where the government provides an interest-free loan worth 20 per cent of the property that the borrower starts to pay back after five years, this is limited to new-builds. It began in April last year. The second part of the scheme officially began this month and involves the government guaranteeing 15 per cent of the loan value if the borrower defaults. The lender pays a fee for this “insurance”.

If you would like further details on this scheme please contact me on 0115 977 1155 or email me at julia@cdgfs.co.uk.

Julia Hoyes Independent Mortgage Broker CDG Financial Services Ltd

Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for arranging a mortgage from £395 to £795 dependant upon your individual circumstances.