From Adviser Guide:
New Buy Mortgages 1hr
Q: What is the NewBuy Guarantee?
NewBuy is a new build indemnity scheme supported by the government.
NewBuy allows buyers of new build property to take out a mortgage between 90 per cent and 95 per cent of the value of the property, compared with loans of between 75 per cent and 85 per cent that most lenders are typically offering on newly-built homes.
A NewBuy mortgage is no different to any other mortgage offered in that the borrower is still responsible for their mortgage payments and any shortfall in the normal way.
It provides no indemnity for borrowers; it will simply enable them to get a mortgage for a higher proportion of the value of the property than would otherwise have been the case.
Jayne Walters, press officer of the Council of Mortgage Lenders, said NewBuy protects the lender in case the borrower falls behind with their mortgage payments and the lender has to repossess the property and sell it.
In that event, Ms Walters said the scheme covers participating lenders’ losses, up to 95 per cent of the sale price.
Under the scheme, Andrew Baddeley-Chappell, head of mortgage strategy and policy on the NewBuy scheme for Nationwide, said customers get assess to higher loan-to-value (LTV) mortgages at lower rates..
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More in this guide
- Q: Who is eligible for a NewBuy mortgage?
- Q: What properties are eligible for a NewBuy mortgage?
- Q: What are the pros and cons of NewBuy mortgages?
- Q: What are the FSA requirements for NewBuy advice?
- Q: What are the alternatives to a NewBuy mortgage?
- Q: How can I source the best deal?
- Q: What information will the lender require?
- Q: How can I make sure my client gets a decision quickly?