The Government's NewBuy Guarantee scheme was declared 'open for business', enabling an estimated 100,000 prospective and existing homeowners to buy a home with much smaller deposits than currently required.
Three leading high street lenders and seven of the country's biggest building firms will begin to offer mortgages on newly-built properties to people with just a 5% deposit; a financial product not available anywhere else in the market. Other leading names, including smaller housebuilders, are expected to follow their lead in the coming weeks and months.
The NewBuy Guarantee means that instead of a typical buyer requiring a £40,000 deposit for a £200,000 property, only £10,000 deposit will now be needed. The Government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total, the lender will be able to recover its loss.
The Government estimates that the NewBuy Guarantee will support about 50,000 jobs in construction and related industries by increasing demand for newly-built homes.
It also hopes the scheme will help jump-start the stalled housing market as people begin to move, ensuring more newly-built and older properties become available to buy.