The Building Societies Association (BSA) has said that 43% of active first time buyers and other home movers are confused about the benefit the Government’s Help to Buy scheme will give them.
Their research showed that 31% of consumers who are looking to buy or move do not know whether there are differences between mortgages offered by lenders signed up to the scheme and mortgages from lenders not part of the scheme.
The research found that a number of inaccurate beliefs about the scheme were held by consumers. These include:
– 18% of first time buyers and 17% of home movers believe that they can borrow more through this scheme than with a ‘standard’ 95 per cent 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 believe that the scheme will protect them if they cannot keep up their monthly payments.
– 12% of first time buyers 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.
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.
Paul Broadhead, BSA Head of Mortgage Policy said: “It is unsurprising that some consumers are finding the Help to Buy: Mortgage Guarantee Scheme difficult to get their heads round. The situation has been complicated by the launch of two very different schemes both called Help to Buy.
“It is essential that providers offering loans under the scheme leave applicants in no doubt about the terms of their mortgage loan.
“I am particularly concerned that a reasonable minority of active first time buyers believe that they can borrow more than normal and that they are in some way protected — neither assumption is true.
“In fact a 95% mortgage through Help to Buy: mortgage guarantee is exactly the same as a standard 95% mortgage. It is vital that these myths are dispelled at application to prevent the possibility of consumers misunderstanding their mortgage loan and later feeling misled.”
