A recent article in the trade press described Help to Buy (HTB) as a ‘roaring success’, and it is not hard to see why. In the 5 years since the scheme was launched, almost 150,000 purchases have taken place which have included a Help to Buy loan, and of these purchases, over 80% have been to first time buyers.
Help to Buy has also been a success for intermediaries. The Intermediary Mortgage Lenders Association (IMLA) recently stated that intermediaries are involved in more than 85% of new build mortgages, versus 70% for all home loans. Given that 2017 was the best year since the scheme began, it is easy to see why HTB has not only helped consumers, it has helped intermediaries and lenders too.
In April this year, Help to Buy came of age, as the first loans are now 5 years old. The significance of this is that for those early borrowers, their loan has ceased to be interest-free, as the interest-free period only covers the first 5 years. These early loans will now be attracting an interest rate of 1.75% for the first year, rising by 1% plus RPI thereafter.
Whilst the interest rate remains at the first-year level, it is probably not going to be too painful for borrowers to pay (and is anyway probably not so very different to the interest rate that they are paying on their mortgage). However, they will of course also be still subject to the shared appreciation rules which come with HTB and, in a rising market, at least some of these borrowers will be keen to remove this issue.
To coincide with Help to Buy coming of age, Furness is delighted to announce the launch of enhancements to our lending criteria relating to HTB borrowers. We will now accept re-mortgage applications up to 95% Loan to value and thereby provide the means to repay the Help to Buy loan. Even better, we will allow this on any product in our range which allows 95% lending, thereby providing fair and transparent pricing, and not imposing a pricing premium for these customers. We also lend at 95% across England, Wales and Scotland, so we can help your clients wherever they are.
The good news doesn’t stop there though. Not only will we provide borrowing to repay the help to buy equity loan, we will also allow additional borrowing (subject to the 95% LTV limit) to allow home improvements. Terms and conditions apply, which can be found on our website.
Furness believes that the HTB re-mortgage market will be a significant market in the coming years, and that these borrowers will be likely to want guidance and advice from our intermediary partners. We are delighted to therefore be able to be at the forefront of developments in the lending industry which help intermediaries to engage with their clients and help them to repay their HTB equity loan, where this is the course of action most suitable for their circumstances.
Call today on 0800 988 1561 and speak to our intermediary team to find out how we can help you to place clients with complex needs, via our friendly and non-credit scoring underwriting process.