According to a study conducted by on behalf of, mortgages which are taken out as part of a ‘help to buy’ scheme cost more than other loans which are available for first time buyers.

The initiative was launched by the government to help first time buyers to get onto the property ladder with a smaller deposit, generally just five percent. The government guarantees the other 20% of the deposit, while the lender provides a mortgage for the remaining 75%. This should mean that buyers can access products that are generally available to buyers with a 25% deposit. However, the study suggests that the Help to Buy loans may be more expensive than loans for 95% of the amount.

The research by revealed that a fixed rate mortgage for two years within the scheme would have a rate of 4.38%, while a two year fixed rate deal for a 95% mortgage would attract a rate of 4.28% on average. The study also discovered that interest rates were similar for longer term deals, where the savings were even more significant, with the Help to Buy products costing more.

When the initiative was first launched in 2014, around £130 billion was made available for guarantees over a three year period. However, after two years of the scheme running, the total mortgage value under the scheme is just £8.3bn. Finding an affordable mortgage can be a struggle, with so many difficult comparisons to make. An adviser who has taken CeMAP training will have the required knowledge and experience to help find the best deal.

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