This scheme is aimed at first time buyers and Home Movers with a deposit of at least 5%, to buy a New Build Property.
The government agency (this is 'My 4 Walls' part of Yorkshire Housing) in Tyne & Wear and Northumberland will provide qualifying borrowers with a loan of up to 20% of the property value, meaning you only require to find a 75% mortgage on the property. You will not be charged any fees on this government loan in the first 5 years.
In year six, you will then be charged a fee of 1.75% of the loans value. This will then increase every year by the Retail Price Index (RPI) plus 1%.
Please remember you will be paying these equity loan fees in addition to your mortgage payments, and the equity loan from the government will not be decreasing in size, so over time it can become expensive.
You will have to pay back the Equity Loan when you sell your home, or at the end of your mortgage term, (with the maximum term being 25 years) whichever comes first. You can also pay back some of your Equity Loan in segments of 10% or 20% without selling your home.
On repayment, you will repay the market value of the loan at the time of sale. Lets say your property has increased in value from £200,000 to £250,000. You would then repay £50,000, as this is 20% of the value of your home, and not the amount you originally borrowed. If the property had fallen in value, you would then pay less than you originally borrowed.
Please call us for further advice on eligibility criteria, which lenders are offering the scheme, and what would best suit you. Remember, we do not charge a fee for mortgage advice!