The plain facts about the Govern­ment’s NewBuy scheme

Yorkshire Post - Property - - PROPERTY - Franz Muelthaler

Q: I’ve heard so much about the Govern­ment’s NewBuy scheme for first-time buy­ers, but what ex­actly does it mean?

A: So many peo­ple have asked me about this and I must stress this ap­plies to new builds only.

The NewBuy scheme is a Govern­ment ini­tia­tive de­signed to give first-time buy­ers, with lim­ited de­posits, ac­cess to mort­gages. It is an ini­tia­tive whereby lenders and the govern­ment un­der­write a mort­gage but it is sub­ject to the fol­low­ing cri­te­ria:

The scheme is only avail­able to pur­chasers of new build houses or flats, priced up to £500,000

Pur­chasers may be first-time buy­ers or those al­ready on the prop­erty lad­der

Pur­chasers must be UK cit­i­zens or those with a right to re­main in­def­i­nitely in the coun­try

The scheme is only open to those pur­chas­ing their prin­ci­pal home

The scheme is not avail­able for shared own­er­ship or shared eq­uity pur­chases

This doesn’t mean ev­ery new build and ev­ery mort­gage provider is avail­able to you. It only ap­plies to those de­vel­op­ers and mort­gage providers who have signed up to the scheme.

Cur­rently the Hal­i­fax, Na­tion­wide, NatWest and Bar­clays have un­veiled their range of mort­gages un­der the scheme with San­tander likely to join by summer.

Not sur­pris­ingly, not all of th­ese lenders have linked with all house builders. This means the home you are hop­ing to pur­chase may not be avail­able through the lender.

Whilst all four lenders have agreed to pro­vide NewBuy mort­gages it only ap­plies to new builds in Eng­land by the UK’s largest de­vel­op­ers, such as CALA, Bar­ratt, Bell­way, Bo­vis, Redrow, Per­sim­mon and Taylor Wim­pey.

Choices are lim­ited through this scheme sim­ply be­cause lenders are tak­ing dif­fer­ent ap­proaches to how they of­fer their NewBuy prod­ucts and where you can buy them from. Some are only sell­ing through spe­cific branches, oth­ers through their in-house teams and some only through mort­gage bro­kers.

The rates on of­fer are higher than those avail­able to peo­ple with larger avail­able eq­uity. For ex­am­ple a typ­i­cal prod­uct with the Na­tion­wide would see a Fixed Rate of 5.79 for the first 3 Years or Fixed Rate of 5.79 for the first 5 Years, with a 5 per cent de­posit payable.

How­ever they do of­fer a way for­ward for peo­ple look­ing to find a step on to the prop­erty lad­der. I would rec­om­mend speak­ing to an in­de­pen­dent mort­gage ad­vi­sor who can help you look at all the op­tions avail­able to you.

Q: Please help me clear up some con­fu­sion; is life as­sur­ance com­pul­sory with my mort­gage?

A: The quick an­swer is “no”. How­ever, I would strongly ad­vise all as­pects of your pro­tec­tion needs are cal­cu­lated, es­pe­cially when tak­ing on such a big fi­nan­cial com­mit­ment like a mort­gage.

Types of cover to con­sider are re­dun­dancy, sick­ness, crit­i­cal ill­ness or death, even down to the ba­sics of build­ings and con­tents in­sur­ance.

It is in­ferred by many lenders that life as­sur­ance, as a min­i­mum amount of cover, is taken out. The idea be­ing that for a joint mort­gage the sur­viv­ing part­ner would not be left with the mort­gage to re­pay.

It pays to think about this, es­pe­cially if the sur­viv­ing part­ner wouldn’t be able to af­ford the pay­ments alone. I would cer­tainly con­sider your per­sonal sit­u­a­tion. Whilst life as­sur­ance is not com­pul­sory it can eas­ily be seen as nec­es­sary.

There are also changes afoot within the life as­sur­ance mar­ket. From 21 De­cem­ber 2012 changes to the EU Gen­der Di­rec­tive will mean women will pay the same as men for in­sur­ance cover.

In­sur­ance com­pa­nies will no longer be able to cal­cu­late in­sur­ance pre­mi­ums based on the cur­rent sys­tem of women pay­ing less due to higher mor­tal­ity rates than men.

Franz Muelthaler is a mort­gage ad­viser for Hol­royd Miler, Wake­field.

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