Interest-free loans for home buyers

Mar 20 2013

First-time home buyers were given good news in the 2013 Budget, as the Government outlined plans to breathe life into the ailing housing market and boost the construction industry.

A new help-to-buy scheme for those struggling to find mortgage deposits will include £3.5 billion for shared equity loans and a Government interest-free loan worth 20% of the value of a new-build house.

Chancellor George Osborne said the scheme will be available to everyone who wants to buy a home from next year. A new mortgage guarantee, sufficient to support £130 billion of loans, will help people who cannot afford a big deposit.

The Government will also offer interest-free loans for five years for those wanting to buy new-build homes.

The loans will be available to those who can find a 5% deposit with the loan worth up to 20% of the value of a home worth up to £600,000 and repayable when it is sold.

Mr Osborne told the Commons: "The deposits demanded for a mortgage these days put home ownership beyond the great majority, who can't turn to their parents for a contribution. And that's not just a blow to the most human of aspirations, it's a setback to social mobility and it's been hard on the construction industry too.

"This Budget proposes to put that right, and put it right in a dramatic way."

Meanwhile, the Chancellor said a planned 3p rise in beer duty tax was being scrapped and replaced by a 1p cut on a pint of beer. And he brought forward a rise in the personal allowance to 2014, meaning no income tax is paid by anyone on the first £10,000 of their earnings. He confirmed that September's planned fuel duty rise has been scrapped.

He also announced a new employment allowance which will take the first £2,000 off employer National Insurance bills for every company in the country - a move he described as "taking tax off jobs".

But he slashed the official growth forecast in half as he admitted the recovery was taking "longer than anyone hoped". He said that the economy would grow by just 0.6% this year - down from the previous forecast of 1.2% - slower than forecast next year at 1.8% compared to the 2% forecast at the time of the Autumn Statement.