Help to Buy  

How brokers can help clients with Help to Buy loans

This article is part of
Guide to Help to Buy

How brokers can help clients with Help to Buy loans

Brokers may be readying themselves for a busy period as Help to Buy borrowers start enquiring about paying off the loan and interest.

The equity loan allows borrowers to purchase a home worth up to £600,000 in the UK, so it is likely to be the biggest financial commitment a client has ever made.

According to the latest figures from the Ministry of Housing, Communities and Local Government to the end of December 2017, the mean purchase price of a property bought under the scheme was £247,230, compared with a mean equity loan of £52,026.

Potential Help to Buy customers, and existing borrowers, will need the right assistance at all stages of the process, but particularly when it comes to deciding how to repay the loan.

Lindsay Judge, housing expert at The Resolution Foundation, explains: “There is somebody called a Help to Buy agent who is the point person who would have set up the loan for you in the first place.”

Those who are considering taking out a Help to Buy equity loan can find an agent in their area by going on helptobuy.gov.uk.

Their role, according to the website, is to “guide you through the options available and explain the eligibility and affordability criteria”.

It states: “They have the authority to give the go-ahead for you to purchase a home with help from the equity loan scheme.”

They are clearly the first port of call for many prospective Help to Buy customers.

Seeking out advice

But existing Help to Buy customers will need to seek advice about the options available to them as they prepare to start paying back the government loan.

The charts below from The Resolution Foundation shows the annual fees paid on the average Help to Buy equity loan made in 2013 in the UK excluding London, and then for London only, and how this increases up to 2023.

Source: The Resolution Foundation

Michael Taylor, group marketing manager for proposition development at Santander, says it is important that borrowers stay engaged with their post-sales Help to Buy agent throughout the time the equity loan is in place so that the first monthly repayment doesn’t come as a shock and there is a clear, single point of contact for borrowers to access information or raise queries.

There is another reason buyers who used the scheme to purchase a house will need to stay in contact.

"Borrowers should also remember to discuss any planned home improvements with their post-sales Help to Buy agent before proceeding, as permission is required for significant improvements, and any value created by those improvements isn’t reflected in the valuation at the point the customer repays the equity loan," Mr Taylor points out. 

"These are important things to remember as details like this can be forgotten over time, so information about the scheme must remain accessible."

Rob McCoy, senior product and business manager at TMA, thinks advisers and brokers will have begun to see an increase in enquiries about Help to Buy repayments in April this year “as early adopters of the scheme start getting notifications of their monthly interest repayment under the equity loan part of the scheme”.