Help to Buy has specialist options worth pursuing – Jannels

by: Dale Jannels, managing director at Impact Specialist Finance
  • 27/06/2019
  • 0
Help to Buy has specialist options worth pursuing – Jannels
With the end of the Help to Buy scheme inching ever closer, I expect it to generate even more views and headlines before it is gradually phased out. But how is it currently performing?


From the launch of the equity loan scheme in April 2013 until 31 December 2018, 210,964 properties were bought with an equity loan.

The total value of these equity loans was £11.71bn, with the value of the properties sold under the scheme totalling £54.48bn.

Most of the home purchases in the Help to Buy: Equity Loan scheme were made by first-time buyers (FTBs), accounting for 171,053 (81 per cent) of total purchases.

The mean purchase price of a property bought under the scheme was £258,223, with buyers using a mean equity loan of £55,498.

In London, the maximum equity loan was increased from 20 per cent to 40 per cent from February 2016, and from then to 31 December 2018, there were 12,511 completions in London, of which 10,635 were made with an equity loan higher than 20 per cent.

These figures highlight how invaluable this initiative has been for many homebuyers since its introduction, and how the take-up is unlikely to slow-down anytime soon.


Be aware of all options

Considering this growth, the recent story on Mortgage Solutions Brokers urged not to ignore Help to Buy alternatives – analysis offered a timely reminder that intermediaries need to ensure buyers are aware of all their borrowing options, both inside and outside of this scheme.

From my perspective, I agree with most of the sentiments included within the article, especially when it comes to the importance of the advice process.

Help to Buy has benefitted from an increased profile in recent times and this has helped more FTBs recognise its attributes – which is a good thing – although it’s prudent to point out that it should not be considered an all-encompassing solution.

And, on the flip side, despite this rise in lending prominence there are still pockets within the market where it can prove valuable for a certain type of borrower which often goes overlooked.


Support for credit impaired borrowers

Now I could well be wrong here, but I believe this type of product is seen by most borrowers, and a strong proportion of intermediaries for that matter, as being one which sits squarely in the domain of mainstream or high-street lenders.

This means the role of specialist lenders can often go ignored, which is a shame.

We work with specialist lenders who can provide Help to Buy solutions for borrowers with an adverse credit history, individual voluntary arrangements (IVAs) or even bankruptcy issues, and this is an important part of the scheme which we tend to hear very little noise around.

So when you’re looking at alternative solutions for your clients, keep in mind the specialist offerings available within Help to Buy.

They might not be applicable for everyone, and still form a small proportion of the overall lending figures, but they should be playing a bigger role in supporting more credit impaired borrowers get a foot on the property ladder for the first time or even back onto it after falling off.

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