Government plans to encourage first time buyers

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Wednesday, 07 December 2011 14:11

Cameron and Clegg announced in November that they are planning to introduce 95% mortgages for first time buyers as an incentive to boost the housing market as well as making home ownership a possibility for many who had previously been priced out of the market.

These new 95% mortgages would be taxpayer-backed and available for first time buyers purchasing new-build properties. This would help to tackle the housing shortages, encourage new builds and create jobs.

As banks are asking for deposits of 20% or more from first time buyers, many are finding it impossible to raise such huge sums, in spite of low interest rates making mortgages affordable compared to the relatively high rental costs. A 5% deposit is much more reasonable and achievable.

Cameron added that he wishes for everyone in the UK who would like to own their own home to be able to do so, and he doesn’t want to move to a European model where renting is the norm.

House builders in Cornwall have lacked sufficient confidence in the market to build in recent times due to the lack of buyers; this has lead to a shortage of new properties across the price range. On the other side of the equation there is no shortage of demand in the real sense, in that there are people who very much want to buy new houses; however this demand has been artificially contained by lack of mortgage finance, and specifically the demand for high initial deposit levels.

It seems possible that if this initiative does what appears to be written on its’ tin that at least some of this log-jamb may be loosened, and first-time buyers may be able to break through the trap that prevents them making the step into their own property. Once there they will find that newly-built houses are now constructed to have very high energy-efficiency levels, which can save their owners increasingly large amounts of money in today’s climate of increasing energy costs. The savings on these bills can be put towards paying the mortgage rather than wasted as they may have been in their draughty rented property.



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