The Government’s mortgage indemnity scheme will be available to all borrowers buying newbuild houses and flats worth up to £500,000 as their main home.
Last week, housing minister Grant Shapps said the NewBuy guarantee scheme will be available to people moving house as well as first-time buyers.
The scheme, which will launch in March, will allow people with a £10,000 deposit to buy a newbuild property.
The Government first set out the scheme proposals in November. It will see housebuilders deposit 3.5 per cent of the sale price for each home sold through the scheme in an indemnity fund, with the Government contributing 5.5 per cent. The housebuilders’ contribution will be held by the lender for seven years and interest will be payable on it. Funds will be returned to the developer after the seven years minus a portion of any losses.
In the event of repossession and the house being sold at a loss, the lender will be able to recover 95 per cent of any shortfall through the scheme. Public money will only be at risk if the borrower and the fund cannot cover the costs.
Up to 100,000 mortgages are to be backed by the scheme.
Shapps is also working with nine public bodies and Government departments including the BBC, Network Rail and Royal Mail to identify unused land and buildings that could be released for housebuilding.
He said enough Government land has already been identified that would enable over 80,000 new homes to be built.
Chartwell Funding managing director Robert Winfield says: “It is brilliant that the scheme is open to movers as well as first-time buyers, as it could help ease the problem of property chains.”