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Budget offers two schemes to help homebuyers

Chancellor George Osborne has announced two new schemes designed to help potential homebuyers who can afford to pay a mortgage but find it difficult to raise a large deposit.

The measures were announced in the Budget.

The first scheme is called Help to Buy: equity loan, and applies to new build properties only. It expands the existing First Buy scheme and is now available to everyone, not just those buying their first home.

To qualify you will need a minimum deposit of 5%. The Government will then lend you up to 20% of the value of the property through an equity loan. This can be repaid at any time or on the sale of the home.

It means you could buy a property with just a 75% mortgage from a bank or building society.

This scheme came into effect on 1 April this year and will run for three years, providing £3.5bn of additional investment in housing.

The second scheme is called Help to Buy: mortgage guarantee. This applies to both new build and existing homes and is available to both existing homeowners and first-time buyers.

Potential buyers will have to provide a minimum deposit of 5%. The Government will then provide a guarantee for up to 15% of the purchase price. This is designed to encourage lenders to provide 95% mortgages, secure in the knowledge that the Government guarantee minimises any risk.

This scheme will be available from January 2014.

Both options are available on home purchases up to a maximum of £600,000.

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