This leaflet will support lenders, including Barclays, Nationwide Building Society and NatWest Home Loans Ltd who have today announced that they have successfully managed to design mortgages and agree relationships with builders enabling them to offer mortgages of up to 95% under the scheme.
We look forward to more lenders, including Halifax and Santander who have announced plans to do so, joining the scheme over the coming months, report the Council of Mortgage Lenders.
The factsheet is freely available on the CML website and can also be used by lenders in their own consumer information.
The leaflet tells customers who qualifies under the scheme, and how it works. It also gives helpful guidance on the sort of customer who is likely to be able to borrow as a result of its introduction.
The CML believes that NewBuy has the potential to:
- increase the supply of new housing as builders will have more confidence that mortgages will be available to finance their sale. This will increase employment in the construction sector
- enable lenders to lend a higher proportion of the purchase price without the level of risk that would usually arise. As a result, some large lenders will not have to hold such high levels of capital as would normally be required on 90-95% lending
- enable consumers who could afford to service a mortgage, but cannot fund a high deposit, to have a wider choice of property and options.
While lenders will assess affordability as carefully as usual, those who are good credit risks should find that the scheme can support their aspirations for home-ownership.
As with all high loan-to-value loans, borrowers need to understand the implications of having a low level of equity, so the CML guide should make a helpful contribution to consumer understanding.
CML director general Paul Smee commented:
"NewBuy will contribute not just to housing supply, but also to economic growth in the UK. And it will re-open access to many creditworthy borrowers to buying a new build property."
