There is much confusion on this subject - a yes AND no answer doesn't really help!
Firstly, the yes – one element of the scheme provided to lenders by the Government (the Help to Buy Mortgage Guarantee) is scheduled to end on 31st December 2016. Whilst this guarantee provided a welcome boost to the market for 5% and 10% deposit mortgages when introduced in 2014, we do not envisage a negative impact from its withdrawal. Lenders are now offering these products without Government support.
This will leave three elements of the scheme still providing support to the market: -
Help to Buy Equity Loan – administered by the Homes and Communities Agency since its inception in 2013 and generally accepted as the most successful scheme to date. Offering those who do not own any other property a 20% loan to supplement their own minimum 5% deposit when buying a newly built home for values of up to £600,000. This allows buyers to secure a property which they perhaps wouldn't have been able to afford and also gain a lower interest rate on the mortgage than would otherwise have been charged.
Help to Buy London – introduced earlier this year and aiming to assist those looking to buy a newly built home in London. Introduced in 2016 and similar to the Equity Loan scheme (above), but the maximum equity loan is increased from 20 to 40% to reflect London prices.
Help to Buy ISA – a special savings account available to first time buyers and offering the opportunity to save up to £200 per month to a maximum total of £12,000. When a property is purchased a Government bonus of 25% of the savings balance, to a maximum of £3,000, is added to the deposit.
Whilst politics can often get in the way, the various schemes have proved to be successful to differing degrees and despite the confusing myriad of schemes with similar names, they do live on to provide support in a number of areas.
A complex area where planning can be required and an early consultation with an Independent mortgage expert is recommended.
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at paul@innovateml.co.uk or tony@innovateml.co.uk or call 0191 223 3514.
Think carefully before securing other debts against your home.
Your home or property is at risk of repossession if you do not keep up repayments on a mortgage or other loan secured on it.
Innovate Mortgages and Loans is a trading style of Innovation Financial Management Ltd.
