UK to confirm homebuying loan scheme in October budget

LONDON: The British government said on Saturday its new equity loan scheme called "Your First Home" would be confirmed in next month's budget.

The policy, a revival of the "Help to Buy" scheme, is aimed at injecting growth into the economy by increasing demand for house building, as well as assisting first-time buyers.

Here are some details:

The government said the scheme was expected to support 2.5 per cent deposits, backed by 20 per cent government-backed equity loans for first-time buyers.

Home buyers would receive an equity loan of up to 20 per cent of the market value of an eligible new-build property, interest-free for five years, and the loan would need to be paid back in full on sale of the property, within 25 years or in line with the main mortgage.

Buyers could purchase a new-build property with a mortgage of 75 per cent of the value of the property, with a value of up to £600,000.

The scheme will also set a household income cap with local property price caps to ensure support is targeted for those in need, the statement from the Ministry of Housing, Communities and Local Government said.

Housing developers will be expected to make a contribution when signing up to the scheme to help cover costs, the statement added.

The scheme is a revival of the "Help to Buy" scheme that ran from 2013 till 2022, which helped over a third of a million people purchase a new-build home.