Last updated on June 30th, 2017 at 11:04 am

Newbuy is aimed at enabling people in England to buy new build homes and pay a deposit of only 5 – 10%.  Lenders who are participating in the scheme will then loan the buyer 90 – 95% of the price of the new house.  The scheme is operated by the home building industry and mortgage lenders (banks and building societies), working in partnership with the Government.  Lenders are prepared to make these larger loans as the scheme is designed to protect them from loss if the property is repossessed, i.e. the government will cover any loss they make, up to 95% of the value of the property.  However, borrowers should note that this does not absolve them from their responsibility to pay their mortgage properly.

Under this scheme, properties up to the value of £500,000 can be purchased from participating builders.  Many of the larger builders, such as Barratt, Persimmon and Redrow are already signed up to the scheme, and most other builders are in the process of signing up. 

Participating builders have teamed up with different lenders, which currently include Barclays, Halifax, Nat West and Nationwide, and each builder will advise which lender they are working with.   Buyers will still need to qualify for a mortgage in the same way as those not using the scheme – they will need to meet the lender’s normal criteria – but will only have to pay a deposit of 5 – 10%.

There are a few specific requirements attached to the scheme including: the need to be a UK citizen; it can only be used for full home ownership – no sharing: the house has to be the owner’s primary home – so no buy to lets or second homes; it can only be used with a capital repayment mortgage – not interest only mortgages, and the buyer cannot receive any help with the deposit from a local authority or other public body.

The legal process of buying the property is exactly the same as buying any property, so you are free to use a conveyancing firm of your choice.  Graysons WE is fully conversant with the new scheme and offers a first class conveyancing service, delivered by an experienced and friendly team with many years of experience, helping to ensure that the whole process goes as smoothly as it possibly can.

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