The scheme, introduced under David Cameron’s government, was hit with fierce criticism after a Telegraph report revealed that the government bonus is not paid out until the mortgage sale completes, despite many borrowers to date having taken out the ISA on the premise that this would go toward funding a deposit.
A recent poll carried out by Mortgage Solutions of 140 brokers showed that 39% of respondents still think the scheme is an effective tool to help with mortgage repayments. But the remaining majority were firm in the belief that borrowers should be able to use the bonus to place a deposit on their home, so no longer a good deal for first-time buyers.
Mortgage broker Danny Matthews, said: “Although the government could do more by changing the rules, I also think some responsibility could be put onto lenders to come up with something creative, such as the Barclays Family Springboard mortgage.
“There should be more education around the scheme in my opinion. It sounds good at face value to consumers, and rightly so. However, comparing it with any other form of savings could help them realise the opportunity they have; if it was an investment it would be a guaranteed 25% return – which is unheard of, especially in savings.”
Tom Cleary, senior mortgage adviser at Charles Cameron, added: “That money should be available on the day of completion and I can’t believe that it’s beyond the will of man to make that possible.”
He added that lenders should have the flexibility to release the payments earlier for borrowers.
“It’s 2016 and technology rules our everyday lives, so why can’t lenders move on completion and transfer the money within 10 hours? There’s no way that’s not achievable. It might need a sign off from government to make that happen, but I doubt it would even need to go that far.”