The move was announced by Chancellor George Osborne as part of his budget speech.
The new FirstBuy scheme applies to new build homes and is designed to help people who have been unable to buy a property because of the need to provide a large deposit.
The Government and the house builders will provide loans to fund 20% of the deposit and the new buyer only has to find 5%.
This will enable them to take out a mortgage for 75% of the property. It’s expected that 10,000 first time buyers will benefit.
The loans are free of charge for the first five years and are repaid on the resale of the property. The funds are then recycled to fund more homes for the scheme.
The Housing Minister, Grant Shapps, said: “First time buyers are still facing huge difficulties – many young people are being forced to postpone homeownership until their thirties and creditworthy first time buyers on good incomes are missing out on the opportunity to enter the housing market by the lack of a large cash deposit.
“By making up to £250 million available over the next two years for deposits on new build homes, this Budget shows that we are serious about sorting this out, and supporting our construction industry to build more homes, create new jobs and increase the pace of economic growth.”
The first new homes are expected to become available from September this year.
Please contact Jenny Bland if you would like more information about the issues raised in this article or any aspect of buying and selling a home.
