Mortgage News
Govt’s new build MIG liability capped at £1bn
The autumn statement has confirmed that the maximum liability the government will face as a result of the new build mortgage indemnity scheme will be £1bn.
The coalition government revealed in its housing strategy on 21 November that it will back up to 100,000 mortgages up to 95% LTV on new build properties, alongside putting £400m towards re-energising the construction industry.
The autumn statement reveals that, for each new build property sold under the scheme, the home builder will contribute 3.5% towards the indemnity fund, while the government will provide a further 5.5% to a total of 9% of the property value.
The indemnity fund will pay out if the mortgaged property is repossessed and there is a shortfall in price. The home builders will take the first hit in such a scenario, while the government will only have to pay up once the builder’s fund has been exhausted.
The report says: “The government will take on a contingent liability which will build up in line with purchases under the scheme, to a maximum of £1bn.
“This will help up to 100,000 families and young people to buy their own home.”
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