What is NewBuy?
People thinking of buying a newly-built home, who do not have a large
enough deposit to qualify for a mortgage, may qualify under the NewBuy scheme.
They will still need to have saved a deposit of at least 5 per cent of the
price of the home they wish to buy.
This scheme applies to England only.
How does someone buy a new
build property under NewBuy?
Home buyers can either visit a participating new-build development or a
mortgage lender in the scheme to discuss eligibility, or they can approach Ward
Williams mortgage intermediary.
Those wishing to buy a new home under the scheme, and who meet the
lender's affordability and credit criteria, will be eligible for a mortgage
loan up to 95 per cent of the purchase price. Lenders will assess mortgages
under the scheme in the normal way.
What is an indemnity and what
does it mean for the borrower?
A mortgage indemnity protects the lender if, at some future stage, the
borrower falls behind with their mortgage payments and the lender has to
repossess the property and sell it. This can result in a loss to the lender if
the property has to be sold for a value lower than the remaining value of the
mortgage. Under NewBuy, the home builder puts aside a proportion of the sale
price into a special indemnity fund and, when this is exhausted, Government
provides a further guarantee to an agreed level.
If the property is repossessed and sold for less than the amount of the
outstanding mortgage debt, the lender can claim on the mortgage indemnity to
recover some of its loss. The basic security for the mortgage is the property.
The mortgage indemnity, therefore, acts as a form of additional security for
the lender.
The existence of the indemnity
does not provide any additional protection for the borrower nor protection from
repossession. It does not cover the borrower against negative equity or a
shortfall between the sale price and the outstanding debt.
In the unfortunate event of a
home being repossessed, the borrower will still be responsible for repaying any
shortfall between the sale price of the property and the outstanding mortgage
debt. This is the same as it would be for any borrower outside the scheme.
What are NewBuy's eligibility
criteria/exclusions?
To qualify for NewBuy, properties will have to be:
- New build - residential properties being sold for the first time or for the first time in the current form
- Priced up to £500k - but there will be no cap on income
- Full ownership - NewBuy will not be available for shared ownership or shared equity purchases
- Primary homes - NewBuy will not be available for the purchase of second homes, for investors or for buy-to-let purchases.
- Buyers will have to be UK citizens and those with a right to remain indefinitely in the country.
It will not be possible to use NewBuy in conjunction with any other
publicly funded mortgage schemes. NewBuy will not apply to interest-only
mortgage products.
Which lenders/builders are
participating?
At launch, these lender/builder relationships were available under
NewBuy (with more to follow): Currently some of these details are only
available through mortgage advisers.
Barclays who will offer 95 per cent
Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis,
Persimmon, Redrow and Taylor Wimpey at just 4.99 per cent fixed rate for two
years and 5.89 per cent fixed rate for four years
Nationwide who will offer 95 per cent
Loan-to-Value mortgages on properties built by Barratt, Bovis, Bellway,
Persimmon, Redrow and Taylor Wimpey at just 5.69 per cent fixed rate for three
years and 5.99 fixed rate for five years; and
NatWest who will offer 95 per cent
Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Linden
Homes, Persimmon, Redrow and Taylor Wimpey at just 4.29 per cent fixed rate for
two years and 4.99 per cent fixed rate for five years.
Santander will launch mortgages in mid-March
Further information: Please
call Wayne Bass on 01932 830664 or 07775995310
No comments:
Post a Comment