Plans to introduce 95% mortgages in Scotland will be eagerly welcomed by many house-hunters hoping to buy a new-build home north of the border. The MI New Home indemnity guarantee scheme is a joint initiative between Homes for Scotland and the Scottish Government and is expected to become available in mid-September. As the proposal aims to increase the number of homes being built, these mortgages will only be available on new-build properties.
It is anticipated that the scheme will help around 6,000 people purchase a new home in Scotland in the three years following its introduction. Alex Neil, Cabinet Secretary for Infrastructure and Capital Investment, says: "We know that many people who want to buy a new-build home are unable to do so because of high deposit requirements. We want to help these people get onto and move up the housing ladder, where it is sensible and sustainable for them."
The scheme allows lenders to offer buyers up to 95% of the value of a new home. In turn, this means purchasers only need a 5% deposit, making new homes much more affordable for many people, particularly first-time buyers. Homes valued up to £250,000 will be eligible for the initiative. MI New Home is due to be launched on Wednesday 12th September.
In the meantime, a number of housebuilders already offer buyers the chance to purchase a new home without having to save for a hefty deposit. For example, Bett Homes has a ‘CanBuy' scheme available, whereby a mortgage lender will provide 85% of the purchase price and an unsecured loan can be arranged for the remaining 15%. Stewart Milne Homes is running a similar offer for a limited time.
Both housebuilders have independent financial advisors on hand for prospective buyers to consult. ‘Parent Payback' is a scheme offered by Persimmon Homes, which is popular with first-time buyers. The buyer's parents put up the deposit for the new home and, in doing so, earn 5% interest per annum for two years making it a win-win situation. Parents earn a decent rate of interest on their investment while their offspring is able to move into a new home sooner than perhaps expected.