The changing seasons may bring longer days and brightening skies but there is also a sense of optimism for many homebuyers across the UK recent announcements from the Government.
First came the much-requested extension of the Stamp Duty holiday, which has alleviated concerns of a “log-jam” in higher ends of the market but that was followed by news of the government guaranteed 95% mortgages.
Readers may recall the “Help to Buy” mortgage guarantee scheme, which closed to new applicants back in 2017 and this is somewhat similar.
Note that the similar sounding “Help To Buy equity loan scheme” is STILL a viable option for first time buyers seeking a route onto the property ladder with a 5% deposit.
So how does this new scheme work?
On the face of it, this will impact lenders more than the borrowers in terms of practicality, as this is more to do with encouraging them to lend to those homebuyers with lower deposits. Their reticence to lend in “normal” circumstances to those with lower deposits simply comes down to their risk exposure.
So, with the government stepping in to back the loans, the lenders have an extra comfort blanket and thus greater flexibility with their lending which is great news for first time buyers especially.
This isn’t a “free pass” though as the standard affordability and credit checks will still apply to borrowers but it is undoubtedly positive news for all with lower deposits as the scheme is not limited to first time buyers.
What it should do is open up the market for more people and keep the market moving, something we welcome.
If you would like to learn more about the government’s Help To Buy scheme, book an appointment with us today on 01743 583 500