Help to buy video

The Help to Buy Scheme, introduced in 2013, aimed to make homeownership more attainable for first-time buyers. By providing a government loan to cover a portion of the purchase price, it allowed buyers to secure a mortgage with just a 5% deposit.

Over 300,000 people have bought a home through the scheme since 2013.*

While these loans have provided a steppingstone for individuals and families to get onto the property ladder, many people are now encountering major repayment challenges:

Anyone at the end of the initial five-year interest-free period of their equity loan will be hit with a new drain on their finances, as they’ll have to pay their monthly mortgage payment as well as start to pay the interest of their government loan at the same time. In the sixth year of the loan, the interest rate on the loan is 1.75%, but after that, the interest rate is recalculated every April by adding the Consumer Price Index (currently at 7.9% as of May 2023) plus 2%. If you bought your home with the earlier Help to Buy: Equity Loan (2013-2021) scheme, the interest rate will be calculated by adding the Retail Price Index (RPI) plus 1%. **

While the Help to Buy Scheme empowered many aspiring homeowners, challenges could lie ahead. Loan repayment struggles, compounded by rising mortgage interest rates and changing financial circumstances, are putting pressure on borrowers.

If you are coming to the end of the interest free period of your loan or are concerned about how much your monthly mortgage repayment could be at the end of your current product tie in period, we are here to help. Our team of professional, friendly and independent mortgage advisors are committed to helping you navigate your way through the mortgage market and will recommend the very best mortgage to suit your individual circumstances. Get in touch today to discuss your circumstances with our team.

Source:

*Help to Buy: Equity Loan – GOV.UK (www.gov.uk)

**Record number of households benefit from Help to Buy as loans pass £20bn – GOV.UK (www.gov.uk),