LONDON - Chancellor Gordon Brown is all set to unveil a scheme that gives lenders and housebuilders a stake in first-time mortgages. This move is directed towards first-time buyers o enable them to get on the property ladder.
Basically, it is an extension of the shared- equity schemes, but it promises to help out young couples who are starting out in their careers and hence cannot afford expensive housing. Halifax, Yorkshire Building Society and Nationwide are understood to have agreed to collaborate with the Government in this scheme.
In his pre-budget address to the Parliament, Mr. Brown said, “We know that shared equity has an increasing role to play in helping young couples in all our constituencies get on the first rung of the housing ladder. I can announce that three of the biggest building societies and banks have joined the government as partners in shared equity."
This scheme is supposed to come into effect from October next year. The first-time buyer is required to finance about 75 percent of the house, while the Government and the mortgage lender chosen by the buyer will fund the remaining 25 percent of the amount.
This scheme has been penciled in for five years and a potential 20,000 first-time buyers will be beneficiaries of the scheme. If and when the property is eventually sold, all the investors including the buyer, lender and the government will take their share splitting the profits and the losses as there may be.
Commenting on the scheme, Nationwide spokesman Steve Blore said, "It is certainly being launched as a pilot scheme. Government and lenders will determine whether it will be opened up further when that scheme unfolds. There will be some discussion on these issues, but it is mainly down to government departments, principally the Office of the Deputy Prime Minister."
He added that there were still some details to be ironed out, but at this stage all systems were in place. The Government has been looking at new innovative ways to help out first-time buyers on the property ladder and this scheme is a novel method to do so.
Posted
on : Tue, 06 Dec 2005 06:45 GMT | Mortgages News
By : Rob Davis
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