Help to Buy mortgage guarantee details confirmed.
The second stage of the Government’s Help to Buy scheme will not be available to second-home buyers, Chancellor George Osborne has confirmed.
If follows growing concerns that buy-to-let landlords, foreign buyers and second-home owners would be able to take advantage of the scheme designed to help more people get a foot onto the housing ladder.
The first ‘equity loan’ part of the Help to Buy scheme has been available since January and allows both first time buyers and home movers the ability to secure a mortgage on a new build property (up to a property value of £600,000) with only a five per cent deposit.
The second ‘mortgage guarantee’ part of Help to Buy will offer Government guarantees to lenders offering first-time buyers who may only have a five per cent deposit on the purchase price of the property.
The Chancellor met with lenders and builders to give details of how the second half of the scheme will work when it comes into effect in January 2014.
In a bid to ensure responsible lending, the Chancellor confirmed:
Those looking to borrow must be able to afford the mortgage repayments and will be subject to income verification and stress testing, as set out in the Financial Conduct Authority’s Mortgage Market Review
Second-home owners, buy-to-let landlords and foreign buyers will not be able to use the guarantee scheme, with the responsibility lying with lenders to collect declarations from borrowers
Help to Buy will not be available alongside any other Government scheme, including NewBuy.
Chancellor George Osborne 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. Lenders now have the details they need to go away and get ready for next January’s launch.”