Advisers from unbiased.co.uk give their top tips for first time buyers on Help to Buy lending.
Their comments follow news from Lloyds Banking Group announcing restrictions to the amount they’re lending through the government scheme.
1. Why is seeking advice crucial for homebuyers?
Karen Barrett, chief executive at unbiased.co.uk, encourages homebuyers to remember the basic house buying principles.
Ensure you review all of your mortgage options when thinking about borrowing, not just the government’s scheme, and look at the whole of the market in order to find and secure the best mortgage deal available, she says.
“Help to Buy won’t be right for everyone which is why it’s important to seek advice. A whole-of-market professional adviser will be able to look at your overall situation, explain all your options and advise you on the best mortgage for your financial circumstances.”
2. What if I’m still planning to use the Help to Buy scheme?
David Hollingworth, London & Country Mortgages says Lloyds is a victim of its own success – it cites large volumes of Help-to-Buy business as the reason for scaling back.
“There will be concerns that such a move by such a large player will provoke others to follow and limit availability of mortgages through the scheme.
“However, it’s not time to hit the panic button just yet and borrowers will find that there are a number of lenders still operating the Help to Buy scheme at full capacity. Anyone considering a mortgage through the Help to Buy scheme should shop around for the mortgage best suited to their circumstances.
“Other lenders including Santander, Natwest, Leeds BS, Skipton BS, Woolwich and Virgin Money are just some of the providers offering attractive deals for first time buyers.”
3. As a first time buyer, what other options are available to me?
Daniel Bailey of Middleton Finance says there are options other than Help-to-Buy.
“There are many mortgage lenders that offer 95 per cent mortgages, which depending on your personal circumstances, may be a better option for you than a mortgage through the Help to Buy scheme.
“If you’re unsure of the options available to you, speak to a whole of market mortgage adviser who will be able to match you with the most suitable mortgage for you.”
4. How does the announcement affect me?
Ray Tamman of Fairstone Financial Management says the announcement should not have any major immediate impact on the scheme.
“If you’re a first time buyer still looking to use the scheme, a whole of market mortgage adviser will be able to help you in securing a mortgage through the scheme.
“If you’re no longer sure that the Help to Buy scheme is the best option for you there are mortgages available outside of the Help to Buy scheme that allow for a 5 per cent deposit. If you are able to squeeze together 10 per cent deposit or more, there is an even greater choice of mortgages available to you.”
5. What else should I think about?
Danny Cox of Hargreaves Lansdown says buying your first home is highly emotive.
“It is easy to be distracted and make quick decisions in haste which you may regret later. It’s important to do your homework before you start house hunting.
“The key to the process is to understand how much you can afford both now and when interest rates rise – which they are sure to do.
“It’s an unusual move by Lloyds Banking Group – banks have a history of easy credit in the good times – but it shows their concerns about mortgage affordability. This £150,000 cap on Lloyds Banking Group’s Help to Buy mortgages should act as a shot across borrowers’ bows.”
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