Benefitting from Prime Minister’s Mortgage Scheme for First Time Buyers
Working towards the betterment of the first time buyers, UK Prime Minister Boris Johnson discussed mortgages in the virtual Tory Party Conference to infuse a level of positivity at the time of coronavirus spread. According to this first time buyer scheme, people can buy a mortgage by paying only 5 percent of the amount stated in the plans. It has been considered excellent towards transforming generation rentals into generation buyers. In this virtual conference on 1st time home buyers, the prime minister developed a hope amongst buyers to boost the number of two million homeowners. But, one thing to consider was that less amount of information was provided about the functional prospects of fixed-rate and long-term mortgages.
Why Generation Buy Scheme is Required?
According to the PM, this step has been taken to fix the broken housing business and assist people that are not able to afford bigger deposits for the intended property. With the announcement of such a scheme, everyone raised questions on its uniqueness, in comparison to the “buy scheme”. In making further promises, the PM stated that he would be transforming the sclerotic planning system for faster development of new homes without disturbing the green belt and the countryside setting. This housing scheme has made it easier for first-time buyers to save on a lot of money and use it elsewhere for important aspects.
Also Read: Benefits of Paying Off Mortgage Loans
Eradication of Stress Test and Its Benefits:
Talking about the benefits of mortgage schemes for 1st time home buyers, there is a possibility that the banks would eradicate stringent stress tests introduced post-financial crash in 2008. This was a step intended to curb irresponsible lending to the people without guarantee of mortgage repayment. Such kinds of tests were used to check the repayment capability of the mortgage buyers on increasing interest rates or even job loss. It is a perfect step taken by Boris Johnson for the betterment and relief of first-time buyers. Though, the scheme is still under the consultation process after being announced by the PM. The global pandemic has hit the business in every sector, which affected the mortgage for home buyers too. Indeed, many lenders have changed their lending and affordability criteria because of the impact on people’s income due to Covid-19.
It has been welcome news for first-time mortgage buyers. But, it is recommended to avail of the benefits by reading the guidelines properly. The way in which the property market has returned to life post the lockdown; it reflects a clear picture that a lot of business has to be maintained at lower LTVs. This is the reason that increasing rates at the other side of the market effectively stanches the flow of new bids to a more adaptable level. The effect of lockdown is such that lenders withdraw low deposits mortgages. But, the first time buyer scheme has been introduced to help people buy their homes.
The 95 percent mortgage scheme for first time home buyers will yield excellent benefits to the people willing to realize their dream of purchasing a home. Certainly, before lockdown, higher loan to value mortgages was quite common and a safe mode to transact. With pandemic dragging everything to the backseat, Boris Johnson has proposed to unleash lower loan to value schemes for 1st time buyers. As per the scheme, the proposal to reduce stress tests will relieve the first time buyers who could not afford to buy a house previously due to stress tests guidelines. With this, it becomes easier for the home buyers to find a house within their affordable budget without much difficulty.
Advantages of Availing Generation Buy Scheme:
One of the best advantages of Boris Johnson’s generation buying scheme is that you can borrow up to 20 percent of the property’s value from the government or even 40 percent in London city. Besides this, the loan amount will not incur any interest for the initial five years. Now, this could save you hundreds of pounds to be paid as interest. Apart from this, there are different ways that a borrower can repay the loan amount as per convenience. However, the first time buyers may either consolidate the loan to their mortgage in case of re-mortgaging, or pay off by selling the property later, or even in the monthly instalments (all subject to terms and conditions).
It seems that Boris Johnson has taken such a step to boost the property market and assist First time home buyers to have their own house. After all, the Prime Minister has pledged to consider the need of people, who have been willing to buy a home; but, increasing property value have been stopping them to do so. But there is no detail yet on how this will be achieved.
If you are a first time home buyer and need advice on it then contact or call Mountview Financial Solutions, A mortgage broker in London & Essex.