On your marks, get set, BUY?
Borrowers may be able to apply for loans through phase two of Help to Buy from this week but not all lenders are fully on board as yet. To help you identify the opportunities of Help to Buy, why not download our free guide.
The original launch of Help to Buy Part 2 was not scheduled for a further three months. However the government surprised everyone by confirming phase two could now be implemented this week.
Who’s on board?
Lloyds Banking Group has committed to offer loans through Help to Buy 2. Other lenders however are seemingly much more hesitant and are calling for clarification surrounding how much the guarantee will cost and whether they will get capital relief on the high LTV loans offered through the scheme.
But even if they receive the answers they are looking for there is real concern whether lenders will be ready in time, particularly as there were doubts surrounding the original January deadline.
Bursting the bubble
Under Help to Buy 2, borrowers will be able to buy new or older properties worth up to £600,000 with just a 5% deposit.
Lenders are able to offer higher loan to value mortgages as the government will provide them with a guarantee for up to 15% of the property’s value, in exchange for a fee.
Whilst its aim is to help get the property market moving again by assisting homebuyers get on and move up the ladder, the scheme has faced criticism in recent weeks with many concerned it could create another housing bubble. London house prices, for example, have up 10% on last year. Many other areas of the UK however have experienced flat or little price growth in the past twelve months.
Chancellor George Osborne has since recommended limiting the maximum loan size available through the scheme should it look like the market is starting to bubble.
Content correct at time of publication