One of the consequences of the banking crisis was a tightening up of the lending criteria used by most mortgage lenders, which famously made it harder for homebuyers, particularly first time buyers, to obtain home loans. The days of five per cent deposits – and even 100% mortgages – were clearly over and new affordability checks threatened to make it even harder to obtain mortgages. Consequently, without financial assistance from family to raise the necessary deposit, the average age of first time buyers rose to 35.
Introduced by Chancellor George Osborne in 2013, the Help to Buy scheme aims to provide financial assistance to first time buyers and other home movers looking to get their feet on the housing ladder. For first time buyers, the scheme offers several benefits:
• Raising a deposit of five or ten per cent is challenging enough for many first time buyers, but small deposit mortgage schemes often levy higher interest rates, meaning the preferential offers are simply out of reach. With the Help to Buy scheme, it’s easier for first time buyers to have a deposit towards their home.
• During the first five years of the mortgage, no interest is due on the Help to Buy loan, making it easier to meet the monthly repayments and to start to pay off the capital.
• As the first time buyer needs to borrow less capital under the scheme, it’s easier to pass affordability tests and more likely that more competitive interest rates will be offered than on 95% mortgages.
• The interest rate on the Help to Buy loan, after the initial interest-free period, is far more competitive than comparable long term loans.
Even with the financial support offered by the Help to Buy scheme, obtaining a mortgage is still a complicated area, with a vast number of contrasting offers available. Securing quality mortgage advice from an independent, professional broker such as Rated Financial Advisers can help you to secure the most competitive deal for your personal needs. To see how Rated Financial Advisers can help you, contact us today on 02084324566.