First time buyers have until end of year to take advantage of Help to Buy scheme

Published: 14th October 2016

At the end of September, the Government announced that it was calling to an end its Help to Buy mortgage guarantee scheme at the end of the year.  The scheme has helped many people get on the property ladder with as little as a 5% deposit.  It did this by providing a guarantee to the lender, that it would pick up some of the losses in the borrower defaulted on their payments.  This made lenders much more willing to lend to people who only had a small deposit, which has been a great help to first time buyers wanting to buy their first home.

The scheme has been available since January 2014 and by June this year (2016) it had helped over 91,759 people buy their first home according to the Department of Communities and Local Government.

So what happens now

There are three different parts to the Help to Buy scheme, the part that will stop at the end of 2016 is the part that enables you to buy a home with just a 5% deposit.  This means that the number of mortgages available to people with just a small deposit is likely to drop in the new year.

So what should you do now?

If you are looking to buy a house imminently and you have at least a 5% deposit, now is the time to buy so that you can take advantage of the scheme before it is cancelled at the end of the year.  There is now a rush of first time buyers trying to get on the scheme.  It can take a few weeks to get your mortgage in place, so there really is no time to waste.  Even if you are not sure if you will qualify for the scheme it is worth coming to see a qualified mortgage adviser, like those at Mortgage Pathways, now in order to find out what your options are.

Valuation firm Connells Survey and Valuations reported that, spurred on by record low mortgage interest rates, the number of first time buyers needing a survey so they could buy their first home increased by 18.7% this September over September last year.

What if you cannot buy this year?

A significant benefit of the Help to Buy mortgage guarantee scheme is that it encouraged a number of lenders to launch mortgages for those people with only a 5% or 10% deposit when they didn’t before.

Now while the number of these mortgages has fallen back over the last few months, according to price comparison site Moneyfacts, there are more than thirty lenders offering mortgages for those with only a 5% or 10% deposit, outside of the Help to Buy scheme.

At the start of October there are still 233 different mortgages available to people with a 5% deposit and another 564 mortgages for those with a 10% deposit.

Next steps

Whether you are hoping to buy this year or need to wait until the beginning of next year it is a good idea to speak to a professional mortgage adviser as soon as possible to discuss your options.

The adviser will run through your situation with you and look at whether you will qualify for the Help to Buy scheme.  If there is the possibility of you being able to take advantage of the scheme, where interest rates may well be lower, they will also be able to advise you on what you need to do next.  The adviser will then take you through the process step by step.