Mortgages: Help to Buy not available for second homes

Posted on June 13th, 2013 | Categories - News

Four in a row IIThe government has confirmed that its flagship scheme to boost the housing market, Help to Buy, will not be available to people buying a second home or foreign buyers.

Help to Buy was announced by the Chancellor, George Osborne, in his Budget speech earlier this year. Launched in two parts, the scheme is designed to help people either buy their first property or move home. However, it has been dogged by controversy, with critics rounding on the scheme amid uncertainty over whether it would be made available to potentially wealthy people buying second homes, perhaps for use as holiday accommodation or as a buy to let investment.

However, in this week’s Prime Minister’s Questions David Cameron confirmed the £15 billion scheme will not be made available to people buying a second home, or indeed foreign buyers.

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Answering a question from Labour’s Seema Malhtora, Mr Cameron said: “First of all, this scheme is for people’s only home. It will have a mechanism in place to make sure that is the case. The second thing which is important is that in order to take part in this scheme you have to have a credit record in this country.”

Help to Buy explained

The Help to Buy scheme has been launched in two parts.

The first part, which started in April, is aimed at helping people buying a new home up to a value of £600,000. Those buyers who qualify can apply for a shared equity loan of up to 20% of the value of the property, providing they can provide a deposit of 5% themselves. The loan is interest free for the first five years.

The second part of the scheme, which is open to people buying both new and existing properties, will start in January 2014. The government will guarantee up to 15% of a mortgage, providing the borrower is putting down a deposit of between 5% and 20%. It is hoped that the guarantee from the government will persuade often reluctant lenders to make mortgages more available, especially to those buyers with small deposits.

Our Q & A, Everything you need to know about Help to Buy Scheme, explains more. Click here to read the article now.

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