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Consumer confusion over Help to Buy Scheme

There is confusion over the Government’s Help to Buy: mortgage guarantee scheme, with 43% of active first time buyers and other home movers confused about the benefit the scheme will give them, according to new research carried out on behalf of the Building Societies Association (BSA).

Furthermore, almost a third (31%) of consumers who are looking to buy or move admit they do not know whether there is a difference between a 95% mortgage offered by a lender which has signed up to the scheme and a 95% mortgage from a lender which hasn’t.

The study also revealed that:

  • 18% of first time buyers and 17% of home movers believe that they can borrow more through this scheme than with a ‘standard’ 95% loan.
  • 12% of both first time buyers and home movers believe that their monthly repayments will be lower as a result of taking a Help to Buy: mortgage guarantee loan.
  • One in ten first time buyers (just 5% of home movers) believe that the scheme will protect them if they cannot keep up their monthly payments.
  • 12% of first time buyers (just 6% of home movers) say that Help to Buy: mortgage guarantee will protect them if their house price falls.
  • 24% of first time buyers and 22% of home movers say that they are more likely to be approved for a Help to Buy mortgage.

In fact none of these statements is correct, say the BSA. The Help to Buy: mortgage guarantee scheme has been designed to encourage more lenders to lend to borrowers with small deposits, increasing the availability of this type of loan. The mortgage that an individual consumer receives and the approval process they go through, are subject to the same lending rules whether a mortgage is inside the Help to Buy scheme or not.

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