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Rishi Sunak has announced property buyers will now be able to apply for 95 per cent mortgages.
In the Budget announced this afternoon, the chancellor revealed it will now be possible to buy a home with a five per cent deposit, making getting on the property ladder easier and more affordable for thousands.
"Lenders who provide mortgages to home buyers who can only afford a five per cent deposit will benefit from a government guarantee on those mortgages," said Rishi.
"I'm pleased to say that several of the country's largest lenders including Lloyds, Natwest, Santander, Barclays and HSBC will be offering these 95 per cent mortgages from next month."
So how will it work? Well, the new scheme will allow buyers to purchase with just a five per cent deposit. It means the government will offer lenders the guarantee to cover the remaining 95 per cent, should the buyer default on monthly mortgage payments.
Buyers will still have to go through all the usual affordability checks, but saving for a hefty deposit won't be as difficult for first time buyers desperate to get on the property ladder.
The idea was initially proposed in October last year, with prime minister Boris Johnson promising to "turn Generation Rent into Generation Buy".
"Young people shouldn't feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder," he said.
The scheme is set to begin in April. It will not be available for buy to let purchasers but is not restricted to first time buyers.
And with the stamp duty holiday also having been extended to the end of June this year, it's certainly a good time to buy!
It means anyone purchasing - and completing on - a property by the end of June won't have to pay stamp duty on the first £500,000.
After that, the nil rate band will drop to £250,000 until the end of September, before returning to its normal level of £125,000 in October.
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