If you live in England and can’t afford to buy a home, there are government schemes that could provide you with financial help. The best known of these schemes is Help to Buy – which is actually two separate schemes: Help to Buy equity loans and Help to Buy mortgage guarantees. You can read more about these in our Guide to the Help to Buy scheme. Another scheme is NewBuy.
What is NewBuy?
NewBuy was launched in March 2012 to help people who are unable to buy their first home or move home because of the large deposits required to afford a mortgage. It is the government backed mortgage indemnity scheme that aims to help people with small deposits of between 5 and 10% to buy a newly built home.
To be eligible for NewBuy, your home must be a new build. This means that it is being sold for the first time or for the first time in its current form, so a new flat that used to be part of a house would be eligible under this scheme. However, your new home must be built by a builder taking part in the NewBuy scheme. Most major and many small house builders are now registered to operate this scheme or are in the process of registering.
The property must be priced at £500,000 or less, and it must be your main home. You cannot use the NewBuy scheme to buy a second home, or to purchase a buy-to-let property. However, you do not have to be a first-time buyer and there is no limit on your level of income.
You must also fully own the property. This means that you cannot use NewBuy for shared ownership or shared equity purchases. You also cannot use NewBuy in conjunction with any other publicly funded mortgage scheme. To take part in the NewBuy scheme, you must either be a UK citizen, or someone who has the right to remain indefinitely in the UK.
How to apply
To apply for the NewBuy scheme, you need to apply for a mortgage from an approved lender. They will carry out the same checks to make sure that you can afford to repay it as they would for any other type of mortgage. If the lender is satisfied that you meet all the criteria, you will get a mortgage of between 90 and 95% of the purchase price.
To find out if there any builders selling NewBuy homes in the area you want to live in, go to http://www.newbuy.org.uk/list-of-newbuy-builders/ and search for the type of house you want and the area.
For help with buying or selling your home, and for more information about NewBuy and other home ownership schemes, click here to visit the conveyancing page on our website.