17 October 2013

Help to Buy picks up pace


The Help to Buy Mortgage Guarantee scheme is picking up pace.  It has now officially launched with Natwest, RBS and Halifax launched some products last Friday.

We’re also informed that Santander, Barclays, Aldermore Bank, Virgin Money, One Savings Bank and Nationwide also intend to offer products for the scheme in the coming months.

Key points regarding the scheme:

  • Applies to mortgages up to 95% LTV.
  • Lender purchases a 15% guarantee from the government
  • £600k property price maximum.
  • Available for First Time Buyers and home movers for purchase of main residence only and remortgages.  NOT available for Buy to Let or second homes.
  • Clients must meet the lenders standard affordability guidelines and criteria.
  • Clients with a history of credit issues will NOT be eligible for the scheme.
Rates on offer from the state owned lenders start from 4.99% and require just a 5% deposit.  But do your homework on these, terms and conditions apply.   

I mentioned this briefly in a previous column, but for those who can achieve a 10% deposit, there are other options.  Rates are fixed at sub 3% and 20% of the loan will be on an equity loan basis, repayable on sale of property with no repayments or interest payments required prior to this.  So effectively, customers are paying monthly interest amounts on a 70% loan, yet have the benefits of just a 10% deposit.

Lenders are certainly looking for niche areas to lend in and are showing a great appetite to lend.

With this in mind, lenders will look closely at an individual’s recent payment profile, how many recent credit searches have been incurred by financial institutions and more.  The more credit searches you have on your profile, over a recent amount of time, the more likely your credit score will be lower as a result. Try and ensure there’s no missed or late payments as these will also decrease your credit score.  In short, your credit search / score are the basis on which most lenders will initially decide whether to lend to you or not.  If you’ve not checked your credit file before, it is well worth a review. Experian, Equifax and Noddle tend to be the main providers used in our market with some offering free initial trials and you can find links to these on the AToM website.

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