Second part of Help to Buy brought forward!
The second phase of the Help to Buy government scheme has
been brought forward from its previous launch date in January 2014 to 7th
of October 2013! David Cameron has expressed his understanding that the need
for this is now.
The second part of the Help to Buy Scheme is a mortgage
guarantee, the government will back up to 15% of the mortgage for borrowers
with deposits as little as 5%. The aim is to make mortgages more readily
available. However there is still a strict process borrowers will have to go
through to obtain the mortgage such as rigorous affordability checks. The property
being purchased will have to be the sole property and cannot be bought as a
second home or buy to let.
There are already several lenders signed up to the scheme
although it has not yet been revealed how much the government guarantee will
cost the lender. The lender will have to pay a fee for the mortgage guarantee,
in the case of a property getting repossessed and not being able to recover the
loan from the sale the government will cover 15% of the loss. This is to deter
lenders from allowing loans to anyone and everyone and ensuring the loans are
affordable for the borrower.
First time buyers and existing property owners are eligible for
the scheme and the second part is for new and existing properties. Some banks
are welcoming the news of the scheme being brought forward, offering longer
opening hours in busy periods, although mortgage brokers fear a flurry of new applicants.
New interest rates on these new government backed mortgages
are yet to be revealed as is the fee for the lender. Applicants can apply for
the scheme as early as next week.
