The Government’s Help to Buy scheme is booming with more than 4,000 inquiries in just two months since it launched.
The Help to Buy scheme is made up of two parts with a shared equity loan scheme and a mortgage indemnity guarantee. The shared equity scheme started in April and offers borrowers a five-year interest-free loan up to 20 per cent of the property price on new build houses. It is available on homes worth up to £600,000.
The effect is to allow borrowers to access 95 per cent loan to value mortgages, that are currently restricted, while lenders only need to offer 75 per cent loan to value.
The mortgage indemnity guarantee scheme launches next January and will offer insurance to lenders to encourage them to lend at 95 per cent loan to value.
The shared equity loan scheme is underway with more lenders signing up and it has seen a huge amount of enquiries.
It will last for three years and the Government has set a target of 74,000 new mortgages through the scheme.
As more lenders sign up it is expected to grow exponentially in the coming months and years and create nearly 2,000 extra mortgages a month.
As house prices remain stable and high in the UK shared equity loans are being increasingly used by first-time buyers as a way of getting on the housing ladder.
The Help to Buy shared equity scheme is being used by thousands of people to buy new build homes and some have warned it could run out of money.
It currently has £3.5bn worth of funding towards loans and when at the moment the Government would stop the scheme when it hits that level even if it is earlier than three years.
Chancellor George Osborne says the scheme is temporary to fix a current market failure with firm plans to withdraw it after three years.
It means that borrowers who want to make the most of this helpful way to cut deposits should strike now while the iron is hot.
There are few restrictions over who can use the loans which is available to anyone looking to buy or move home up to £600,000.
It means that anyone who is doing should take advantage and discuss any opportunities with your mortgage broker.
Since the crisis the mortgage market has been suffering with high deposits and strict criteria for getting a deal. Any blot on the credit rating has been used as a reason not to give someone a mortgage to huge frustration for borrowers.
But the tide is now turning with mortgage rates plumbing to new depths every day and Government schemes to help bring back 95 per cent loan to value mortgages.
The two main barriers facing borrowers of high deposits and monthly affordability of payments are easing through Government support. Borrowers should make the most of these schemes as they are wide-ranging and can have a beneficial impact for most people.
There are many who are reluctant to get involved with Government schemes or think a mortgage is out of their reach.
Now is the time to check that theory and take a look at the mortgage market and speak to a mortgage broker to see whether you qualify