If you’re struggling to save enough deposit for a mortgage or move away from renting, you are right there with thousands of other aspiring first time home buyers. Especially as living costs and mortgage rates rise this year, fanning the flames of unaffordability.
But hope is in the air. In a speech on June 9, the PM sprung into action with plans for a thorough mortgage review that’s set to begin in the next few weeks.
He intends to launch a “home ownership revolution” by reversing declining homeownership rates, which fell from 55% to 34% between 1996 and 2016.
The new measures and first time home buyer schemes are planned to help many people get a foot on the property ladder in the UK.
The game plan is to offer more financial support and looser restrictions to help those who can afford monthly mortgage payments but currently fail to meet lending criteria to overcome stumbling blocks that prevent homeownership.
Sounds like a breath of fresh air for the public in the current political and economic landscape!
Here, our Ilford estate agents cover what has been released about the measures so far to help you discover whether you may be able to buy your first home sooner than you expect.
The first mortgage market review for first time home buyers in decades
First time mortgages for home buyers are due to be overhauled. Boris aims to increase access and availability of 95% mortgage loans later this year.
This is welcome news after a steady rise in mortgage rates since the beginning of the year and means that you may only need a deposit of 5% to move into your dream home! Time to get property searching?
First time home buyer scheme extension
Primarily aimed at tenants in homes owned by housing associations, The Right to Buy scheme is expected to be extended to help up to 2.5 million gain property ownership.
It’s set to level the playing field for housing association tenants who face stricter criteria than council tenants who receive up to 70% discount depending on the length of tenancy.
As a follow-up, the Prime Minister commits to building a quality replacement for every social home sold to alleviate the housing shortage.
A boost to low-income households – ‘benefits to bricks’
There are also plans to allow benefits to contribute not only to rent but also to mortgage payments. Millions of people on UC and similar benefits will inevitably find it easier to switch from renting to mortgaging!
In addition, Lifetime ISA and Help to Buy ISA savings could be discounted from universal credit eligibility rules. In other words, those who claim UC can save more than £16,000 without benefit payments ceasing to build up enough for a home deposit faster.
Making way for 30-year mortgages
As part of the mortgage market review, the UK Government, together with the Treasury and the Department for Levelling Up, Housing and Communities, is considering launching 30-year fixed-rate mortgages.
This would be a drastic step up from current fixed-rate mortgages, which typically last two to five years.
Loans could also be available near 100% to further reduce the pressure of saving for a deposit on a first home.
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