Could you Benefit Under the Help to Buy Mortgage Guarantee Scheme?
The Help to Buy mortgage guarantee scheme rules were changed in April 2015.
The Help to Buy mortgage scheme was launched in January 2013, and is planned to run until 31 December 2016. If a home buyer and the property which he, she or they intend to purchase during this period are eligible for the scheme, the Government will offer those participating lenders (including a number of high street banks) the option to purchase a guarantee on the mortgage loan. This allows the participating lender the option to offer home buyers a greater home to loan value on mortgage (e.g. 80-95%,) which gives eligible home buyers the ability to purchase a property with a lower deposit.
Eligibility for the scheme includes whether a home buyer is considered by the participating lender to be ‘credit-impaired’ with a history of payment difficulties. If so, the participating lender can refuse the home buyer’s application for the scheme. However, the Government has now caveated this ground of eligibility by changing what constitutes a ‘credit-impaired borrower’.
A ‘credit-impaired borrower’ now includes someone who has been the subject of one or more county court judgments for a debt or debts with a total value greater than £500. This excludes any debt satisfied one month or less from the date of the judgment or three years or more before the date of completion of the loan.
Although the change does not apply retrospectively to mortgage offers made before 8 April 2015, it is a welcoming change to those who require assistance under the scheme.