FirstBuy aims to help 10,000 first-time buyers in England over the next two years, backed by £500m from the government.
Lenders will offer 75% LTV mortgages to potential first-time buyers taking part in the scheme. The remainder will be made up of a 5% deposit from buyers and a 20% loan from the government and house builder, which is interest free for five years.
Halifax and Barclays have both said they will announce a specific range of FirstBuy deals shortly, while Nationwide confirmed that its standard range of 75% LTV mortgages will be open to FirstBuy applicants.
More than 100 house builders will take part in FirstBuy offering new build homes for sale through the scheme.
They include Persimmon Homes, Barratt Homes, Bovis Homes, CM Yuill, Galliford Try Homes, Morris Homes, Radian and The Miller Group Ltd.
Potential first-time buyers will initially access the scheme through a HomeBuy agent and, once they have agreed a sale with a builder, can proceed with the mortgage through a broker of their choice or directly with a lender.
Andrew Baddeley-Chappell, head of mortgage strategy and policy at Nationwide, said: “Nationwide has a strong history of supporting first-time buyers and affordable housing, so this scheme is very attractive to us and we are keen to support it.
“Of course, while the scheme is important and helpful, it is important for potential buyers to fully understand that, by its nature, it is not the same as a normal mortgage. The loan is only interest free for the first five years and their actions could be restricted, such as remortgaging.”
Announced in March’s Budget, the scheme has now officially kicked off and Shapps encouraged aspiring first-time buyers to register their interest with HomeBuy agents.
Shapps said: “FirstBuy will offer a valuable alternative to the Bank of Mum and Dad. Over the next two years, this will help as many as 10,000 people in England to get that much-needed deposit together and realise their dreams of owning their own home.
“And, because this help will be available on newly-built properties, it will also offer a much-needed boost to our house building industry, supporting thousands of jobs across the country.”
Stewart Baseley, executive chairman of the Housebuilders Federation, said: “FirstBuy will help first-time buyers, boost economic growth and provide a vital shot in the arm for the house-building industry. Our members have reacted decisively to support FirstBuy and recognise the scheme is an important first step.”
