There’s no denying that the past 12 months have been an immensely difficult time for not just the UK but the whole world, however thanks to the positive effects of the third lockdown and the vaccine rollout here in the UK, we’re hopeful that we’re coming out of the other side and here at Radcliffe & Rust we’re ready and excited for the next chapter in our business and future. We’ve already seen a huge increase in requests for property valuations, lots of new rental properties coming to market and we’ve also taken on lots of exciting new sales instructions all of which show no signs of slowing down, which is really exciting for our business and the industry as a whole.
Thanks to the recent budget announcement by the Chancellor, Rishi Sunak, there have been a number of incentives to help to continue the property market grow. The first of these is the stamp duty holiday being extended until the end of June 2021, which means if you purchase a property, and as long as it completes before the end of June, you will not pay any stamp duty on the first £500,000. On a property purchase of £500,000 you will save over £19,000. For more information on the stamp duty holiday, please see our previous blog post.
There was also an announcement regarding a new mortgage guarantee scheme, to help buyers with a 5% deposit get on to or move up the property ladder. This will come into effect in April and will run until December 2022. When the first lockdown hit in March 2020, 95% mortgages all but disappeared. With so much economic uncertainty, the threat of huge potential job losses and an impending recession, lenders were understandably cautious to offer mortgages with such a high loan to value (LTV) ratio, but thanks to the new mortgage guarantee from the government, this will encourage lenders to restart these fantastic offers and allow first time buyers achieve the dream of owning their own home, that would otherwise be unable to.
Why is the government offering the new mortgage guarantee?
The scheme is designed to increase the appetite of mortgage lenders to offer higher LTV mortgages to open the property market up to those with lower deposit amounts. The lender will be able to purchase a government guarantee that will compensate the lender for a portion of losses, in the event that the homeowner does not keep up with mortgage payments. The government will charge a commercial fee for the provision of this guarantee.
Below are some answers to commonly asked questions regarding the new government scheme.
Is the scheme only available to first time buyers?
The scheme is available to both first time buyers and property owners looking to move.
Is the scheme only available on new builds?
The scheme is available on both new builds and second hand properties.
Is there a limit on the price of the property for the scheme?
The scheme is available on all properties up to the value of £600,000.
Which lenders will offer mortgages on this scheme?
Large and well-known lenders including Lloyds, Natwest, Santander, Barclays and HSBC will offer this scheme initially and Virgin Money will continue a little later.
Can I fix my rates?
Yes, the rates offered can be fixed for up to five years if required.
What criteria will I need in order to qualify?
You will need to have a regular income, a good credit rating and provide evidence that you can afford the monthly repayments.
These fantastic opportunities will give the entire housing market a massive shot in the arm. Whether five percent deposits or huge Stamp Duty savings, brand new chains will be created, allowing every step of the housing ladder to benefit. This, coupled with the pent up demand from lockdowns and guaranteed feel-good factor of life returning to normal, means our current and future customers are in for possibly the most exciting housing market this century.
We hope you have found this post helpful in answering your questions regarding the government mortgage guarantee and the exciting prospects that 2021 could hold. Please call us on 01223 307 898 or email info@radcliffeandrust.co.uk for all of your sales and lettings requirements in Cambridge.