More details of mortgage scheme for new homes
Tuesday, 22 November 2011 11:11 AM
Seven major mortgage lenders and 25 house builders have agreed in principle to take part in the new mortgage indemnity scheme for new-build homes.
The plan revealed in the government's housing strategy will give a guarantee on up to 100,000 new mortgages at up to 95 per cent loan to value in England and be led by the Home Builders Federation and Council of Mortgage Lenders.
It will be open to all potential buyers except buy-to-let investors and second home owners. All builders and lenders who operate in England will be eligible and the scheme will apply to all new houses and flats.
The seven lenders who have agreed to take part make up over 80 per cent of the mortgage market in the UK. They are Barclays, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander and Yorkshire and Clydesdale.
The 25 builders together provide 60 per cent of the new homes in the UK. The list is headed by the three biggest: Barratt, Persimmon and Taylor Wimpey.
For buyers, the process for applying will be the same as for any other mortgage, with no equity loans or second charges. It is not yet clear what rates lenders will charge on the loans.
For each new home sold under the scheme, the house builder will contribute 3.5 per cent of the sale value into an indemnity fund and the government will support the fund up to nine per cent of the property value.
The fund will pay out if a property financed under the scheme is repossessed and there is a shortfall. Builders will take the first loss in the indemnity, with the government stepping in if necessary after that.
There will be a cap on the value of homes eligible for the scheme but this has not been announced yet.
Other housebuilders taking part are: Crest Nicholson; McCarthy & Stone; Bellway: Fairview New Homes; Miller Group; Bloor Homes; Galliford Try; Bovis Homes: Gladedale: Redrow; Antler Homes; Grainger; Stewart Milne; Aquinna Homes; Jones Homes; Places for People; Banner Homes; Morris Homes: Strata Homes: CALA; Nicholas King Homes: Urban Renaissance Villages; Croudace Homes; Octagon Developments: William Davis; and Heyworth Developments.
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