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published on 30/09/2020  

The Prime Minister has promised to help more people get onto the housing ladder through increasing the availability of mortgages for those with small deposits.

Boris Johnson said millions of people who could afford a mortgage were prevented from getting onto the property ladder because they could not save the necessary deposit.

He announced plans for a new scheme to give more people the chance to take out long-term fixed rate mortgages for up to 95% of their home’s value.

On a £200,000 property, this would mean borrowing £190,000 and saving a deposit of £10,000.

The Prime Minister said the government believed it would enable an additional two million people to become homeowners, representing the biggest expansion of homeownership since the 1980s.

Why has the scheme been implemented?

The issue of homeownership has been made more urgent by the coronavirus pandemic and its associated lockdowns.

In the past, 95% mortgages have been widely available, but the majority have been withdrawn by lenders since the pandemic struck.

Johnson added that while some people were happy to live in a rented home, the majority of people aspired to buy their own place but were prevented from doing so by the need to save a large deposit.

Where can first-time buyers turn for help now?

The government already offers a number of schemes to help first-time buyers get onto the property ladder.

Under the Help to Buy equity loan scheme, people can purchase a new-build home with just a 5% deposit, with the government topping this up with a 20% equity loan that is interest-free for five years.

The scheme is currently available to all buyers, but it is due to be relaunched in April 2021 for first-time buyers only.

Other help includes the First Homes scheme, which enables first-time buyers and key workers in England to purchase a new-build home at a 30% discount, and shared ownership, which enables people to purchase a share in a property and pay rent on the part they do not own.

Those aged under 40 who are saving for a deposit can use the Lifetime ISA, under which the government contributes up to £1,000 a year to savers who set aside £4,000 annually towards the purchase of a new home or retirement.

First-time buyers have also benefited from a stamp duty exemption on homes costing up to £300,000, although the chancellor recently announced a stamp duty holiday for all buyers on homes costing up to £500,000 until 31 March 2021.

Tags: Governemnt, Help, First, Time, Buyers, First Time, First Time Buyers