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Newbuy Guarantee

NewBuy was launched by the government on 12th March 2012. It is a scheme designed to help house-hunters by underwriting 95% mortgages with participating lenders, so that they will grant affordable mortgages to buyers of new-build homes who only have a 5% deposit to offer.

The government and housebuilder jointly underwrite the loan, so that the lender is taking less of a risk and will therefore reduce the interest rate on the mortgage. Up to 100,000 homebuyers could benefit from NewBuy.

The key points of NewBuy are:

  • Available on new-build homes in England, from participating developers, up to a value of £500,000
  • First-time buyers and existing homeowners can apply
  • Available to UK citizens and those with a right to remain indefinitely in this country
  • Only available if the property is to be used as a primary residence (not as a second home or for buy-to-let)
  • Only applies to full ownership (not shared equity or shared ownership)

At the time of launch, three major mortgage lenders were signed up to NewBuy – NatWest, Nationwide and Barclays.

At launch, seven housebuilders were signed up: Barratt Group, Bellway, Bovis Homes, Linden Homes, Persimmon Homes, Redrow and Taylor Wimpey. Crest Nicholson and Miller Homes were said to be close to coming on board and the Home Builders Federation stated that in all, some 130 housebuilders had expressed and interest in participating in the scheme.