First time buyers given a helping hand

First time buyers were thrown a lifeline by George Osborne in the budge in the shape of a £250m assisted deposit scheme for new homes.

The First Buy scheme will be open to those with a household income of less than £60,000 a year who can put down a 5% deposit on a brand new home.

Those who qualify will be eligible for a loan worth up to 20% of the value of the new property and will be jointly funded by the government and housebuilders. The loan will be interest-free for five years and only be repayable when the house is sold.

Lots of debate as to whether this is a good thing or not. It’s another debt for first time buyers and has to be repaid at some stage, but it does give them access to cheaper, lower “loan to value” mortgages so will make the majority of the mortgage debt less expensive. However it does just encourage people to borrow at 95% of the purchase price and partly on an interest only basis – something the government in their “Mortgage Market Review” wants to outlaw!

The property market needs first time buyers so anything to help them onto the ladder will benefit the rest of the market.

Would I get one, probably not, nothing wrong with renting these days when prices are flat or potentially falling – and in the meantime save a 10% or 15% deposit!