Due to COVID-19 and the consequential lockdown, banks have altered their rules regarding mortgage eligibility. It is now very difficult for first-time homebuyers to find mortgages with a loan-to-value of more than 85%. This means that many people need to save up for a deposit of 15% – which can be a lot of money, especially people between 20 and 40 years old. Therefore, COVID-19 has been a real thorn in the side for many hopeful homebuyers during 2020.
Recently Boris Johnson announced that he wants things to change for people who are struggling to purchase a home. He aims to help as many as 2 million first-time homebuyers get onto the property ladder. It is now the government’s intention to fix the broken housing market and to change ‘generation rent into generation buy’.
So, what exactly is Boris going to do? Well, he has suggested that a new scheme could be introduced, where first-time homebuyers will be offered long-term fixed-rate mortgages with a 5% deposit. You may have heard of ‘Help to Buy’, which is similar, however, Help to Buy only aids new build purchases. The new scheme will help with homes of all ages. Brand-new properties have their perks, such as being environmentally friendly and modern, but perhaps you might prefer an older home with history and character.
We do not yet know many details concerning Boris’s upcoming plans and we will share all of the details in due course. However, what we do know is that mortgages with smaller deposits will result in banks’ lending more money, which will mean banks are going to be taking greater risks. So, the government must be planning to offer a guarantee to banks, meaning that they will take a portion of the debt should a buyer fail to repay what they have borrowed. This offers some much-needed reassurance when buying in these uncertain times.
In addition to alterations of mortgages, the government are proposing changes to planning permission. They intend to make planning permission faster and easier (as long that homes aren’t being built on the green belt or in the countryside). Planning permission at the moment can be a nightmare for many developers and homeowners. This means that homes are currently being built/improved at a very slow pace. This change will simplify and hasten the process of applying and granting planning permission for certain projects. This way, your dreams of becoming a homeowner can become the reality for many sooner than expected.
Keep looking for updates regarding this new scheme, we expect that it will kickstart pretty soon. In the meantime, you can download our FREE Houso App to have a look around for potential homes: for Android or Apple devices.