Lenders shun Help to Buy remortgage deals
The shine appears to be coming off a government home loan scheme which was initially praised by an IFA to contractors for giving PSCs a leg up, or onto, the property ladder.
It is the former scheme users – contractors already on the ladder— who face being prejudiced against if freshly figures by Home England, the housing regulator, are anything to go by.
Handed to the Financial Times, the figures show that only a reported eight out of 25 lenders now offer remortgage deals to borrowers who are yet to pay off the state’s loan via Help to Buy.
Nationwide, NatWest and RBS were said to be among the 17 lenders who refuse to offer remortgaging options to people who have the government’s 20% equity loan still outstanding.
A more admin-heavy process for remortgaging a Help to Buy (HtB) property was blamed by housing experts, on top of concerns lenders’ may have about affordability for the borrower.
Homes England is working with UK Finance to increase the stock of remortgage deals from lenders for Help to Buy borrowers, but in the meantime their options to switch look limited.
The reduced choice may put the squeeze on the initial HtB users of 2013, who are just ending their five-year interest free loan period, as this year they must pay interest at 1.75%, rising annually in line with RPI, plus 1%.
If you have a question about contracting please feel free to ask us!