David Britch of Total Peace of Mind has kindly offered to write a guest blog post to give some guidance on mortgages and purchasing a home.
If you’d like further information, don’t hesitate to contact him using the details at the end of the piece.
95% mortgages will be readily available from the high street lenders due to the governments Help to Buy Mortgage Guarantee Scheme.
George Osborne outlined details of the scheme on the 23rd July and is as follows:
The Chancellor has issued details to lenders of the government’s Help to Buy mortgage guarantee scheme, to enable them to start boosting high loan-to-value (LTV) lending by next January.
At a meeting at Number 11 the Chancellor discussed with lenders and builders details of how the scheme will work, as well as broader efforts to get more first time buyers on the property ladder.
The Chancellor of the Exchequer said:
I’m determined to back people who want to do their best for their families. Help to Buy is about getting behind those who aspire to own a home.
The mortgage guarantee will support an increase in high loan-to-value mortgages for people who can’t afford large deposits, and it will also boost housebuilding. As of today (23 July 2013) lenders
have the detail they need to go away and get ready for next January’s launch.
Major UK homebuilders have put their support behind the scheme and its ability to help boost housing supply.
Stewart Baseley, Executive Chairman of the Home Builders Federation, said the “outlook for new homes delivery is a positive one”.
The housebuilders confirmed that taken together with the Equity Loan scheme, government action has already helped boost home construction.
Mark Clare, CEO of Barratt Housing, said that the number of homes Barratt is building is already up “over 20%” on two years ago, due to the Help to Buy scheme.
He also said that the company is investing for the future by increasing its commitment to buy new land to over £1 billion, in Barratt’s financial year to the end of June.
Pete Redfern, Chief Executive of Taylor Wimpey, said he believes that the second phase of Help to Buy will “benefit the whole market, particularly existing homeowners who want to move up the housing
ladder but have been unable to do so”.
In addition to the criteria set out at the Budget, the rules set out on 23 July 2013 aim to ensure the scheme helps a large number of people onto the property ladder while ensuring responsible lending.
Anybody wishing to borrow money must be able to afford a mortgage and will be subject to income verification and stress testing, as set out in the Financial Conduct Authority’s (FCA) Mortgage Market
Borrowers won’t be able to access guaranteed mortgages if their credit history doesn’t meet FCA ‘impaired credit’ standards, including having a County Court Judgement over £500 in the past three years.
As previously confirmed, people will not be able to use the mortgage guarantee scheme to buy second homes, with lenders required to collect a declaration stating that the borrower has no interest
in a property anywhere else in the world.
It will not be possible to use Help to Buy in conjunction with any other government scheme, including NewBuy.
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