Family standing outside a house they have just bought with sold signQ: What is the NewBuy scheme and how can it help me buy a house?

A: The NewBuy scheme is an affordable way for first-time homebuyers to take that first step into the housing market or for cash-strapped families to move up the property size ladder.

It was launched last March and aims to help buyers purchase new-build properties that are worth less than £500,000 and will be classed as their main home.

The way it works is essentially for the house-builder, the prospective house buyer and the government all to pay into or guarantee the sale.

The company that built the property and the mortgage lender pays 3.5% of the sale price into a special protection fund for seven years.

The fund can then be accessed by the lender should the homebuyer fall into money troubles. The Government provides an additional guarantee of 5.5% of the sale price, although this money can only be accessed if there is a major property crash.

There are six lenders currently offering the NewBuy scheme, which is essentially a 95% mortgage, meaning the buyers only need a 5% deposit.

These high loan-to-value rates are practically unheard of nowadays as they are so risky for the lenders in this current economic climate, but lenders are willing to take this risk as they have the added security of the special indemnity fund.

The six lenders offering deals on the NewBuy scheme are currently Halifax, NatWest, Santander and Nationwide, Woolwich and Aldermore.

There are a huge number of builders taking part, including Taylor Wimpey, Miller Homes, Barratt Homes, Fairgrove and Bovis Homes.

The one thing to bear in mind with this scheme is that as the homeowner will have a very small stake in the house, they are offering themselves up to the risk of going into negative equity (where the house is worth less than was paid for it) in this shaky financial climate.

However, if the property is to be a family home for many years to come, participants will hopefully be able to wait out any fluctuations in house prices.

For more information, visit the official NewBuy website (http://www.newbuy.org.uk).

Andrea Ventress, money expert

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