Are lenders refusing to commit to the Help to Buy scheme?

Help To BuyIn relation to the Help to Buy scheme, it has been reported that until more details are released about the benefits for lenders – and the costs – they won’t be joining the scheme any time soon.

Currently, there are just two government–backed banks (Royal Bank of Scotland and Lloyds Banking Group) that have committed to offering the scheme to their customers.
Last week, it was announced that the scheme would be launched three months earlier than expected. This was a huge surprise especially to the lenders whom are unable to decide whether to join the scheme until the Government outlines the costs involved.

Help to Buy will be open to both first-time buyers and existing home owners buying new build and older properties worth up to £600,000. Borrowers need to put down just 5% with the Government covering up to 15 per cent enabling buyers to obtain a 75% mortgage.

Some could argue that bringing the second phase of the ‘Help to Buy’ scheme forward was purely a political manoeuvre in an otherwise difficult Conservative week. However, whatever the reason one thing is for sure, until such time as Banks fully understand everything about the scheme, (after all the ‘devil is always in the detail’) and is able to handle the workload, the rates they are going to offer will be high compared to others available in the marketplace.

These higher rates are not only a consequence of the lower deposits but also as only a few banks are committing to the scheme in these early months. We know from our family mortgage business, Alton Mortgages Ltd, that low rates by a provider get snapped up extremely quickly and often Lenders are swamped with too much workload to be able to handle effectively from an administration point of view. With this in mind it seems sensible for the banks to dip their toes in the water in a cautious and controlled manner.

Only time will tell whether the scheme ramps up next year, as more lenders join the party.

Gill Alton

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Gill Alton is the founder of Alton Property Partners, which provides a comprehensive and personal Property Portfolio Building Service for investors in the UK.

Alton Property Partners manage the entire investment process, from sourcing property at a discounted value, co-ordinating the Mortgage, arranging the refurbishment, right through to ensuring it is ready for the rental market.

The service is specifically aimed to support those who recognise the value of a UK investment portfolio, but lack the time, or knowledge to be able to invest for themselves because they are full time employees or Business Owners. With full consultation and comprehensive financial analysis, clients can be assured that their portfolio of strong yielding properties will be built to exacting standards and they will be kept up to date every step of the way.

Having been involved in property for 16 years Gill has built a personal portfolio for her family, and in addition to Alton Property Partners, runs a Property Mentoring Business, Venus Property Mentoring which focuses on supporting new investors onto the investing ladder. Having originally left the Corporate world to be a Qualified Mortgage Broker, Gill’s husband now focuses on their family Mortgage Brokerage in Maidenhead – Alton Mortgages.

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Alton Property Partners
6 Bramble Drive, Maidenhead BerkshireUKSL6 3NX United Kindom •0845-095-5060

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