Mortgage brokers have said first time buyers only have a week or two left to benefit from the government’s Help to Buy scheme, ahead of the October 31 deadline.
Leaving it longer than this risks the process becoming untenable and would leave the prospective buyer short of negotiating time, brokers have said.
“The challenge faced by most is finding a new build house that's available to buy. You will need every professional at your disposal to be on fire with the process,” James Miles, director of The Mortgage Quarter said.
In May, it was announced that the scheme was winding down two months earlier than initially planned.
Buyers must reserve their home with a registered homebuilder and submit their equity loan application by 6pm on October 31.
Legal completion, or signing of contracts, needs to happen before 31 December and then the scheme will draw to a complete close in March, when buyers must have the keys to their property by 6pm on 31 March 2023.
If this deadline is not met, the buyer will not be given the equity loan.
Simple Fast Mortgage director, Rob Peters warned that buyers need to be sure their application is completed correctly before the October deadline, because they will not be able to reapply after this.
“House buyers who want to use the Help to Buy scheme better make like Usain Bolt and get a sprint on,” Peters said.
“There are no government plans to replace the successful Help to Buy scheme, but for those who will miss the deadline the good news is that all is not lost. There are other 5 per cent deposit solutions available in the market including 95 per cent mortgages and equity loans from a variety of providers.
“Though none are as low cost as Help to Buy, they can give those with a small deposit the ability to purchase a home.”
However, not all in the industry agree with Peters on the success of the scheme.
As of August, the scheme has loaned £22.5bn to first time buyers, but some brokers have expressed concern that borrowers will not be able to repay their loans against the backdrop of rising interest rates and the cost of living crisis.
Meanwhile, a report published earlier this year by the House of Lords found the scheme had pushed up house prices in England and failed to “provide good value for money” for the taxpayer.
Missing Element Mortgage Services’ Paul Neal said it is important to remind clients that when they redeem Help to Buy they are not paying back what they have borrowed, they are paying back 20 per cent of what the property’s value is which may increase repayments if the property value increases.
“This is something all users of the scheme need to be made very aware of,” Neal stressed.
jane.matthews@ft.com
