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Guide to Help to Buy - UpdatedAlternatives to Help to Buy mortgages
As a consequence, Brian Murphy, head of lending at Derby-based Mortgage Advice Bureau, says lenders have been extremely reluctant to re-engage this sector and it has really taken the intervention of government to once again restore confidence by providing the guarantee.
Mr Murphy says as a consequence of Help to Buy 2 we have seen a number of lenders once again start to offer high loan-to-value mortgages without recourse to the guarantee afforded by the government-backed scheme.
There are 12 lenders participating in the government scheme, but the number of lenders offering 95 per cent mortgages is now many times more than this, with availability being extended.
He says: “Help to Buy two has created a more normally functioning market which should ensure the market is able to continue once the scheme ends latterly in 2016.”
As well as some lenders launching rates at 95 per cent loan-to-value in the wake of Help to Buy 2’s launch incumbent lenders improved their offering due to the broader number of lenders and deals, says David Hollingworth, associate director of London & Country Mortgages.
Mr Hollingworth says: “Some lenders like Woolwich still offer deals up to 95 per cent LTV to the child if they can get a collateral guarantee from a parent. As there is more security the rates can be lower.”
Mortgage applicants should explore family gifted deposits, says Mark Bullard, head of sales at NatWest Intermediary Solutions. This is where parents or guardians gift their children cash to use as a deposit.
Gift of equity when buying from a family member should also be discussed, says Mr Bullard. This is where a mortgage applicant receives a gift of equity from their parents or guardians.
Speaking to FTAdviser in July, Richard Sexton, director of e.surv, says advisers should look at Barclays offer a similar mortgage called Springboard Mortgage, which also requires a 5 per cent deposit but opens a ‘start account’ linked to the mortgage and automatically holds 10 per cent of the purchase price in the account for three years.
Similarly Mr Sexton says Nationwide’s “Save-to-Buy” gives a rate up to 2 per cent gross a year and a 5 per cent deposit mortgage if you keep their account for longer than six months and meet saving requirements.
Mortgage lenders also present HomeBuy as an alternative to Help to Buy as it is a shared-ownership scheme that aims to help people on low or moderate incomes in England get on to the property ladder.
To be eligible for HomeBuy or First Steps, the borrower would need to have a household income (with or without a partner) of less than £60,000 a year.
Ian Wilson, head of Halifax Intermediaries, says you could be a first-time buyer or renting from the council or a housing association. Some properties are reserved for key workers such as nurses, teachers and police officers.
