Markets are Finally Opening for First Time Home Buyers
When the real estate market started to show signs of decline in 2007, the first step taken by lenders was to tighten the lending restrictions for first time home buyers making it more difficult for them to obtain a mortgage.
A recent announcement by HSBC, one of the leading mortgage lenders in the UK, shows that for the first time in almost two years deals are now becoming available for those wishing to purchase their first home. This banking giant is offering mortgages to qualified first time home buyers with only 10% deposit on the loan.
Experts in the real estate industry are hoping that the other UK banks and financial institutions will follow the example of HSBC. However, even without this deal, there are ways for people to purchase their first home without having a lot of cash available for a large deposit. The market is not closed completely if you know where to look.
HomeBuy Direct is a government sponsored program which provides subsidies for first-time home buyers. Thousands of borrowers in England could qualify for a mortgage subsidy for up to 30% of the purchase price of the home. The government has allotted £400 million for this initiative, which means there is plenty of money available. It is estimated that 18,000 families could benefit from this program but since they do have to apply it is best to do so early before the funds run out.
HomeBuy Direct is a government response to the failing real estate industry. There is eligibility criteria associated with acceptance into the program. The homes, for example, must be new homes built by a builder that has been approved by the government. No such program exists in Scotland and Wales at the present time, but talks are underway with a view to making one available to the public.
The applicants for the HomeBuy Direct program must also meet certain restrictions. The annual household salary must be less than £60,000 and they must not have previously owned a home. In addition, they must be renting at the time they submit their application. Another criteria applicants must meet in order to qualify is that they have not been able to afford any of the homes that are for sale within a reasonable distance from their place of work.
One of the first families to be accepted for the subsidy, Rebecca Wellington, Michael Leach and their four-year old daughter, have accepted a home in Gloucester. This house is due to be completed in June by Persimmon Homes. The couple has been trying to obtain a home for years and are delighted to have been able to take advantage of this program.
According to Rebecca, “We always wanted to buy, but with prices as they were it seemed out of reach.”
It was actually Rebecca’s mother who found out about the program and brought it to her attention.
The homes bought under the HomeBuy Direct program must have been purchased before March 31. The deals are on a first-come, first-served basis because each of the builders participating in the program has been given a set amount of money. Once that limit has been reached buyers can no longer sell homes under the subsidy program,
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