The new Help to Buy scheme will be “essential” for first-time buyers, with fewer high LTV mortgage products on the market, according to Trussle.
The online mortgage broker described the scheme as a “lifeline” for first time-buyers to own their own home.
In August, the government announced it was extending the Help to Buy scheme deadline to help customers that may have experienced delays in construction due to coronavirus.
The new Help to Buy scheme, which will replace the current scheme, will come into place from 1 April 2021 and run until March 2023 – with no plans for further extensions expected. The new scheme is set to introduce property price caps and will be restricted to first-time buyers only.
Trussle head of mortgages, Miles Robinson, highlighted that first-time buyers have accounted for more than 80% of home purchases made so far using the scheme.
“The Help to Buy scheme has supported thousands of homeowners move onto or up the property ladder, and in many cases has been a lifeline for first time-buyers to own their own home,” Robinson said.
“With first-time buyers accounting for over 80% of home purchases made using Help to Buy so far, the new scheme is essential in a time where higher LTV mortgage products have dwindled.
“The new scheme has some additional benefits for those looking to buy their first home. The scheme’s regional price caps are higher than the average price for a first-time buyer property in each region, ensuring people will be able to afford a home in their local area.
“Also, the required deposit is only 5% of the overall home price, significantly less than the average first time buyer deposit needed across the country.”
However, Robinson also noted that the new scheme’s exclusion of next-time buyers could impact the housing market, should this group get left behind.
“Support for next-time buyers will end when the 2021 scheme comes into effect,” he continued. “While a minority of purchases made using Help to Buy came from next time buyers, their exclusion from this next scheme could impact the property market if this group gets left behind in years to come.
“Existing homeowners who are thinking about Help to Buy will need to act quickly and find a local Help to Buy agent to discuss their options should they be looking to buy using the current scheme.”
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