George Osborne unveils details of next phase of Help To Buy

George Osborne has unveiled further details of the second phase of the government's Help to Buy scheme, due to launch in January.

Mr Osborne met housebuilders and mortgage lenders on Tuesday morning to discuss how plans to underwrite £130bn of mortgage lending will work.

The first stage of Help to Buy was launched in April and offers loans to buyers of new build homes priced below £600,000 that are interest-free for the first five years. The buyer needs a 5% deposit.

The scheme has been credited with spurring a surge in home sales and driving up prices.

The £12bn mortgage guarantee scheme, due to launch in January 2014, is open to buyers of all properties, not just new build, with a 5pc deposit. The government will guarantee a proportion of the home loan as long as the property is priced at less than £600,000.

The scheme will only be available to borrowers who can afford the mortgages, the Treasury insisted, while those with impaired credit ratings will be excluded.

It will also not be available to buy a second home, and lenders will be required to collect a declaration stating that the borrower has no interest in a property anywhere else in the world. It will not be able to be used in conjunction with another state scheme.

Both parts of the Help to Buy scheme have come under attack from bodies including the International Monetary Fund and the Office for Budget Responsibility, which have warned they could create another property bubble.