Both will be available for homes worth up to £600,000 and there will be no restriction on how much applicants need to earn in order to qualify.

How will the loan scheme work?

The interest-free loan will be offered from 1 April 2013 and will be limited to people who want to buy a new-build property. It is similar to the existing First Buy scheme, but this time it is available to existing homeowners as well as first-time buyers.

Borrowers will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow a further 20% on an interest-free basis from the government. The biggest loan available will be £120,000.

The state-backed loan must be repaid when the property is sold. It can be repaid earlier, but only if the mortgage is paid off at the same time.

After five years it will attract an interest fee of 1.75%, which will rise annually by the RPI rate of inflation plus 1%.

Should you require any help or further information on this scheme then please feel free to contact our in-house mortgage adviser – Andy Harrod on 01522 510044. He can guide you through the whole process and find the most suitable mortgage for your circumstances.