New interest-free loan for (some) first time buyers
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by: Robert Allen21
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A person might need to take loans from the financial institutions in case of a financial emergency. One who has a proper knowledge of taking loans can get loans at the lowest rate of interest. If a person spends little time for searching about the loan plans then he can easily get an interest free loan.
Sadly, on closer inspection, it appears that those suspicions were well-founded - there are indeed a few catches. Firstly, you have to be a key worker (a teacher or health worker for instance), live in London, the South East or East Anglia and your household income can’t exceed £60,000, or you might have been nominated by your local council as being someone in ‘housing need’.
So, if this still sounds like you how exactly do you get your hands on this fifty grand wedge? Well, I should point out that £50,000 is a hypothetical figure; the amount is actually equal to 17.5 per cent of whatever the house price is so on a £300,000 property (the average house price in London is currently £336,000) you’d qualify for £52,500. It should also be made clear that the 17.5 per cent will remain fixed so you’ll have to pay back the same percentage of whatever the sell-on price turns out to be, which will ultimately end up eating into any profit you make.
Before you start thinking about any of that though you’ll need to find out if you’re actually eligible which means applying with a local housing association. This is where things become slightly unclear; there is a feeling that, with a question mark over exactly how much money the government is making available for the scheme, the number of homebuyers who are eligible might necessarily end up being rather limited. It seems these new equity loans aren’t actually being allocated any extra funding beyond the existing, widely criticized HomeBuy scheme introduced to help key workers afford mortgages by contributing 12.5 per cent of the loan.
Apparently the criteria for eligibility will be the same as the original HomeBuy scheme but if the governments guarded approach to clarifying exact details is anything to go by it seems more than likely that funding won’t meet the potential demand, especially if no additional money is being made available.
If you’re a young professional considering a mortgage but aren’t eligible for government assistance there are mortgage deals out there that recognize future earning potential even if your income isn’t currently that high, like Alliance and Leicester, who allow you to take out loans between £5,000 and £100,000 over terms between 5 and 25 years and provide the helping hand of a mortgage calculator, to help keep your payments in check.
About the Author
Robert Allen is author of this article on mortgage calculator. Find more information about loans here.
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