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Guide to FirstBuy Direct

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30/10/2012
In June 2011, the Government launched FirstBuy Direct, a shared equity loan scheme designed to assist first-time buyers and boost the construction industry.
Guide to FirstBuy Direct

 

 

It is expected to help up to 10,000 buyers get onto the property ladder. Under FirstBuy, which succeeds the previous Labour government’s HomeBuy Direct Scheme, the Government and selected house builders jointly provide borrowers with equity loans of up to 20 per cent of the price of a new-build home, so that eligible purchasers only need to find a five per cent deposit to qualify for a 75 per cent loan-to-value (LTV) mortgage.

 

FirstBuy is only available in England and lenders including Halifax, Barclays, NatWest and Nationwide are among those offering FirstBuy products on the market.

One of the concerns surrounding FirstBuy is that if property prices fall, buyers paying a five per cent deposit could suddenly find themselves in negative equity – where their property is worth less than they paid for.

This problem is compounded because the scheme only applies to new-build properties, which many believe are more susceptible to price fluctuations than more established housing stock.

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