Help to Buy scheme fails to meet targets
August 22, 2015 by Brendan
Borrowers
According to a report in the Sunday People, the number of people taking advantage of the government’s Help to Buy scheme has fallen far short of the Chancellor’s targets.
The report states that the number of applicants falls far below the target of 60%, with only 47,000 supported by the scheme, against a target of 118,000. The scheme, which will continue until 2020, was intended to help first time buyers struggling to get on the property ladder to obtain a mortgage. A large number of people struggle to get sufficient cash for a deposit, although they can afford to pay a mortgage. The government’s scheme offers a guarantee to the lender that it will cover the outstanding losses if the borrower defaults on the mortgage.
As a result, buyers can apply for a loan of 95 per cent, with just a five per cent deposit. Emma Reynolds, the shadow housing minister believes the news is disappointing, saying:
“David Cameron needs to take action to tackle the growing housing crisis by getting the homes we need built.”
The data also reveals that six people have defaulted on their mortgages, while 64 have arrears. According to experts, the scheme isn’t working as expected as it encourages increases in house prices, making it even more difficult for many to obtain a mortgage.
As mortgage advisers have undertaken the relevant CeMAP Course, they are in a strong position to help potential buyers search for the most affordable and suitable product for their circumstances, reducing the risk of defaulting.
Written by
Brendan
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