Some things the Government decide make headline news, while others slip quietly under the radar. So it may have escaped your notice that those in power have announced there will be no extension to the Help to Buy Mortgage Guarantee scheme.
The reason? Since the scheme's launch in 2013, open-market loans for those with small deposits - most commonly first-time buyers - have become more freely available, in tandem with generally better lending conditions across the whole of the mortgage industry.
As outlined when Help to Buy was first launched, the Mortgage Guarantee element is set to end on 31st December 2016. The Help to Buy Equity Loan scheme will continue to run until 2020, unless the Government decides otherwise.
Purchasers wishing to take advantage of the Mortgage Guarantee scheme are urged to speak to a mortgage advisor as soon as possible to secure any preferential Help to Buy rates before they are withdrawn. It is worth pointing out, however, that with interest and mortgage rates at record lows, purchasers may find better deals outside of the Help to Buy framework.
As a refresher, here's how the Help to Buy Mortgage Guarantee scheme works:
- The Government offers lenders the option to purchase a guarantee on mortgage loans involved in the scheme - this lessens any financial risks for the lender.
- This guarantee allows lenders to offer home buyers more high loan-to-value mortgages (80-95% of the purchase price), giving buyers with deposits of 20% or less access to more attractive mortgage products.
- Purchasers are responsible for funding their own deposit and must use a lender who is part of the Help to Buy approved panel.
- The mortgage is the only loan to be repaid - there is no loan from the Government, unlike the Help to Buy Equity Loan scheme.
The government has confirmed that the Mortgage Guarantee Scheme - introduced in 2013 to increase the availability of high loan-to-value mortgages - will close as predicted on December 31.