Brokers urge Help to Buy borrowers to “get their skates on” as deadlines approach

by | Sep 13, 2022

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Brokers have urged anyone seeking to make use of the Help to Buy scheme to “get their skates on, pronto”, ahead of the forthcoming deadlines.

They have also reassured borrowers that “all is not lost” for those who do miss the deadline, as there are other 5% deposit solutions available in the market including 95% mortgages and equity loans from a variety of providers.

James Miles, director of Exeter-based broker, The Mortgage Quarter: “If you want to bag yourself a Help To Buy equity loan, you’d better be quick. The challenge faced by most is finding a new build house that’s available to buy and you’ve got just over two weeks to negotiate. You will need every professional at your disposable to be on fire with the process. Is it worth the stress? Remember the builder needs to have completed the build by the end of this year. Get in touch with a broker and discuss all the avenues you have to buy a property and find the right property in the right time to fit your circumstances.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “Anyone wanting to use the Help to Buy scheme before it closes needs to get a move on. There are some better-than-market-average interest rates for Help to Buy mortgages, especially if the property has an EPC rating of A or B. Realistically, most people have got a week or so before it becomes untenable. So if your plan as a first-time buyer is to buy a new build using Help to Buy, then get your skates on, pronto.”

 

Jamie Lennox, director at Norwich-based mortgage broker, Dimora Mortgages: “Although there is still time to apply before the deadline on the 31st October, the real issue is finding a builder that has available properties that will be ready in time. Most builders typically look to secure a buyer six months before the house is fully built. With the practical deadline for houses to be built by being the 31st December, most of the properties that will be ready for this deadline will have been sold a number of months ago so there will be limited availability of properties that the scheme can be used on. For the peace of mind of buyers already undergoing the process, one welcome relief is that if the deadline can’t be met they will be refunded their reservation fee and, if contracts have been exchanged, unconditionally released from this with their deposit refunded. Despite this, buyers are still likely to be out of pocket as they will likely have already paid a series of fees for legal and mortgage advice. Then on top of this there is the emotional disappointment of buyers who have waited months on a property to be built and then could be told towards the end it’s no longer going to be possible to buy it due to delays. Alternative options still remain slim pickings. More lenders are now willing to accept smaller deposits on new builds, as historically they’ve often needed a larger deposit when not using the scheme. There are other schemes to help people get on the housing ladder such as shared ownership and some small localised shared equity schemes.”

Paul Neal of Derbyshire-based Missing Element Mortgage Services:We’ve been advising clients now for some time that if Help To Buy is something you’re interested in, you need to get moving quickly. If you’ve not got an application in already, then chances are you won’t meet the deadline. However, one thing to be made aware of and which a lot of Help to Buy clients I’ve helped seem to not be aware of, is that when you redeem your Help to Buy you aren’t paying back what you’ve borrowed, you are paying back 20% of what the property’s value is. This is something all users of the scheme need to be made very aware of.”

Mike Staton, director of Mansfield-based Staton Mortgages: “The dates have already been set for the three major deadlines that need to be met. The final deadline for applications is 31st October, practical completion 31st December and 31st March is the deadline to move in. The Government has been very clear about the repercussions for failure to meet these deadlines, which is forfeiture of the scheme. In a nutshell, if you miss any of these deadlines, you lose the home. However, for the first time, we are seeing some repercussions for the builder if they fail to meet the December or March deadlines, as they will be made to release the buyer without penalty. Hopefully this will put much needed pressure on developers to get people into homes instead of making empty promises on completion dates like we have seen so many times before to the detriment of buyers.”

 

Rob Peters, director of Altrincham-based Simple Fast Mortgage: “House buyers who want to use the Help to Buy scheme better make like Usain Bolt and get a sprint on. The application deadline has been set for 6pm on 31 October 2022, which means buyers must have found and reserved a property before this date. Importantly, buyers need to ensure the application is completed correctly because if there are unacceptable changes, the homebuyer cannot re-apply after 31 October 2022. Legal completion, or signing of contracts, needs to happen before the 31 December 2022 and the buyer needs to move in or complete by 31 March 2023. 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% deposit solutions available in the market including 95% 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.”

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