Help for homebuyers when it’s needed most
First-time purchasers and second steppers have been making their moves thanks to an innovative scheme
LAST September a scheme was launched in Scotland that is having a real impact on the sale of new-build homes. The scheme, MI New Home, has been designed to help housebuyers overcome the high deposit requirements being demanded by many mortgage lenders.
At times deposits of up to 25% have been necessary before purchasers could qualify for a mortgage and it has been recognised for some time that this hurdle has caused stagnation in key sectors of the housing market.
The spotlight has been turned in particular on first-time buyers who have found themselves faced with paying more in rental than they would on a mortgage, but unable to raise the cash for a deposit.
However, so-called ‘second-steppers’ have also found themselves unable to move because they have lacked sufficient equity.
For both groups, the prospect of raising the funds needed for a deposit has been daunting and, faced with years of saving or seeing no realistic way in which they could get sufficient money together, many people had simply resigned themselves to putting plans on hold.
That, though, was before the introduction of the MI New Home scheme, which can help creditworthy buyers purchase a new-build property up to a value of £250,000 with a deposit of between 5% and 10%.
It has proved to be the breakthrough that many purchasers were waiting for and in one year has helped more than 500 households on their way to buying a new home.
The scheme is a partnership between Homes for Scotland, whose membership provides 95% of all new properties built for sale across the country, the Scottish Government and three key lenders.
Since it began, 25 leading housebuilders, more than double the figure at launch, have become involved, offering real choice to buyers in locations across Scotland.
The scheme has been designed to be very easy to take part in.
Prospective buyers simply search on the MI New Home web site (www.minewhome.co.uk) for a list of participating builders and check to see if they are building in their area.
They can then call or visit the builder’s sales office, view available show homes and speak to staff for more information.
Then, provided that they have a deposit of between 5% and 10%, and meet the mortgage lender’s affordability requirements, they may be able to purchase a newly built home under the scheme.
And the sums are certainly persuasive. As of July this year the lenders involved were offering two-year fixed options at rates between 4.44% and 4.69% on new homes with a 5% deposit, which on a £150,000 home is £7500. Add to that the fact that since January of this year homeowners interested in the scheme have had the option of trading in their existing property through part-exchange, then the prospect of a new home became much more affordable.
Homes for Scotland chief executive Philip Hogg says the scheme is proving to be of real benefit to those who can afford mortgage repayments but who have been prevented from purchasing a home because of their lack of deposit.
“Home ownership is the long-term tenure of choice for 78% of Scots but high deposit requirements have prevented many from making their desired move. Now, though, MI New Home is making a real difference, enabling those buying through the scheme to start exciting new chapters of their lives.”
The scheme is supported by the Scottish Government. Deputy First Minister Nicola Sturgeon said: “We want to help people get on to and move up the housing ladder where it is sensible and sustainable for them. The MI New Home scheme is doing just that. It is helping households across Scotland who can afford mortgage repayments on a new-build property but don’t have sufficient resources for a full deposit. Our commitment to the scheme demonstrates yet again how we are helping families and individuals to buy their own home, while also growing our economy by creating jobs within the housing sector.”
The more than 500 households that have already chosen to take up the MI New Home option could be joined by many more as an increasing number of people realise that 95% mortgages are available on a large range of brand-new homes.
Derek Pollard, of independent financial advisor Mortgageforce Scotland, has become very familiar with guiding buyers through the MI New Home mortgage application process. He said: “The MI New Home scheme has been a very important addition to the Scottish housing market, enabling those with a real appetite to buy to do so sooner rather than later with monthly mortgage payments that are both competitive and sustainable. In fact, MI New Home mortgage rates are some of the most keenly priced in the whole market.”
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