First-time buyers will only need 5% deposit under new initiative

A NEW initiative backed by the Scottish Government, mortgage lenders and home builders could help thousands of first-time buyers on to the property ladder.

A NEW initiative backed by the Scottish Government, mortgage lenders and home builders could help thousands of first-time buyers on to the property ladder.

The MI New Home mortgage indemnity scheme will give people wishing to buy a new-build property the opportunity to borrow 95 per cent of the cost of the home.

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It follows reports this week that the average age Scots expect to be able to afford their first home is now 40 – because of the difficulty of saving 25 per cent of the cost of a new home to put down as a deposit.

Deputy First Minister Nicola Sturgeon said: “Basically, it puts lenders into the position where they can give 90 to 95 per cent loans, which will reduce the amount needed for a deposit. For a lot of people, it is the barrier to them getting a mortgage.”

Ms Sturgeon visited a Barratt development in the west of Edinburgh to launch the scheme yesterday.

The Scottish Government said the scheme could help 6,000 people on to the property ladder over the next three years as well as providing a much-needed boost for the construction industry.

According to building industry body Homes for Scotland, there are currently 26,000 people directly employed by Scottish housebuilders – compared with 52,000 in 2007.

Homes for Scotland says the scheme has the potential to generate sales of up to £1 billion over three years, and could create or safeguard 22,800 new construction jobs and more than 650 apprenticeships.

According to the Council of Mortgage Lenders, there were 44,000 loans advanced for all home purchases in Scotland in 2011, compared with 105,000 in 2006 – a fall of 60 per cent.

Philip Hogg, chief executive of Homes for Scotland, said: “When we had the financial crisis, one of the first things to dry up was mortgage lending.”