Help to Buy Scheme brought forward

Help to Buy House

Help to Buy

Stage 2 of the Help to Buy Scheme is to be brought forward three months and will start next week the Conservative Party announced today. The scheme is designed to make it easier for home buyers to buy a home with a smaller deposit.

Under the scheme buyers can buy with a deposit from 5% as the Government guarantees up to the next 15% of the property’s value, for which the lender pays a fee. The Help to Buy Scheme should see a wider range of mortgages in the 5% to 20% deposit range.

In the past lenders offered higher low to value mortgages by using a mortgage indemnity guarantee where insurance was taken against default of the loan. This ‘MIG’ was typically loaded on as a cost to the borrower. Under the new Help to Buy scheme this risk and the cost of it is not the borrowers concern.

What does this mean in practice

From next week expect to see a number of new higher loan to value mortgage products on the market. Supply to this market is likely to be led by the tax payer funded lenders such as Halifax and Nat West. If the same pattern is followed as for the initial Help to Buy Scheme it may take a while for all products to filter through.

One of the most valuable aspects of the Help to Buy Scheme stage 2 is that mortgages can be arranged for all homes, not just new build.

A Mortgage Now will be aware of any new products and will be able to offer them to buyers along with our usual excellent service.

Call us now on 020 8979 9684

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