Pirate FM News

"Help To Buy" Helps Cornish Families

news - housing

Published by the Pirate FM News Team at 7:03am 8th October 2013. (Updated at 7:05am 8th October 2013)

A first time buyer and new dad in Truro tells Pirate FM it would not be possible without 'Help to Buy'.

The 95% government-backed mortgages come in today - and will help people buy a house worth up to £600,000.

Some say it is going to fuel a housing bubble - and could help people buy up more second homes in the Duchy.

But Ed Farndon tells us it has definitely helped his family take their first step on the ladder: "We would not have been able to get a four bed house in Truro and we would not have had the spare cash to make it our own because all of the spare cash would have gone into the deposit.

"Looking at the fact I've got a new family and we really wanted to settle in Cornwall this scheme has been hugely beneficial.

"It gets people in my position, with a young family, trying to buy a house, it gets you that first step."

Prime Minister David Cameron said: "Help to Buy is going to make the dream of home ownership a reality for many who would otherwise have been shut out."

Chancellor George Osborne said: "Too many people are still being denied the dream of owning their own home, which is why we have brought forward the launch of this scheme, so as of today borrowers can start applying for a mortgage with a 5% deposit."

Taxpayer-backed Royal Bank of Scotland and its subsidiary NatWest immediately set out mortgage deals under the scheme and announced that 740 of its branches would extend opening hours for two weeks to cope with expected demand.

Halifax and Bank of Scotland, owned by the state-backed Lloyds Banking Group, will start offering loans under the scheme on Friday but the Lloyds brand itself is not taking part.

The Treasury also announced that Virgin Money had signed up while the start-up Aldermore Bank has also said it will join.

Both will take part from January and Aldermore is exploring whether the date can be brought forward.

A Treasury spokesman said the lenders involved so far represented more than 30% of the mortgage market and that more lenders were expected to indicate participation in the coming months.

The scheme had initially not been expected to start until the new year but has been brought forward by three months.

It will offer £12bn in mortgage guarantees over three years and some estimates suggest 180,000 loans could be taken out under the initiative.

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.

Help to Buy is controversial because critics fear it could fuel further rise in a housing market where prices are already rising.

But the Treasury said that while house price inflation stands at 3.3%, it is only 0.8% when the property hotspots of London and the South East are removed.

The new scheme means homebuyers will only have to find as little as 5% on homes worth up to £600,000. Depending on the size of the deposit, the Government will then guarantee up to 15% of the property 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.

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