There’s help to buy a home: It just looks a little different now

By Laura Sears

The property market has remained resilient this year and we’ve seen prices increase rather than crash– they’re currently 6.6% higher on average than this time last year. This is great news to everyone except those with lower savings hoping to buy soon.

At time of writing on 15th December, there are just eight 95% loan to value (LTV) mortgage products on offer in the UK, a fall of 98% since the start of the year, with most of those drying up during the spring lockdown.

Supported by the Stamp Duty holiday however, the market has remained buoyant, leading to some lenders re-entering the high LTV mortgage market. The supply of 90% LTV mortgages in particular has nearly tripled since hitting a low of 51 products in October, with 143 products now available.

Homeowners already on the ladder who are hoping to purchase a new build home with a small deposit might need to sit tight a little longer – as today was technically the last day for housebuilders to register new sales under the current iteration of the Help to Buy Equity Loan. Despite being billed as officially changing in March 2021, buyers will need to complete by the end of this financial year, meaning an application needed to be submitted by today.

For those unsure of how Help to Buy works – the 2013 version of the equity loan scheme means buyers can do so with as little as 5% of the property’s value as a deposit. Homes England supplements this with a loan of 20% (40% in London) that is interest free for the first five years, leaving the buyer to obtain a mortgage of just 75% (or 55%) for the rest, up to a value of £600,000.

The new scheme sees changes which will increase the supply of homes purely for first time buyers by limiting the availability to those who have owned before – a criticism of the previous scheme being that it allowed those who had previously owned to also use the scheme, taking valuable stock from the FTB market by enabling them to take advantage of the smaller LTV mortgage.

It’s worth noting, however, that those affected by build delays as a result of COVID-19 will still be able to use the scheme if they aren’t able to complete in time for the end of the financial year, providing they exchanged before 30 June.

However, some FTBs may still be unable to use the new scheme due to new regional price caps. While remaining at £600,000 in London, in other areas the upper limit is reducing in line with average property prices – though this can vary and, in some cases, appears to be £20,000 lower than the average cost of a home according to Rightmove.

On a positive note, Katie Brain, banking expert at Defaqto, suggests that “it looks like the market is stabilising now”.

Matt Coulson of mortgage brokers Heron Financial agrees, saying that “It’s great to see big players such as Halifax and Nationwide re-entering the 90% LTV market.” But he also iterates that “the key is to make sure that (buyers) are in the best shape they can be financially.”

I really hope that the light at the end of the tunnel is there for people like me looking to buy in the near future. My search will continue in 2021, but for those thinking of upsizing and perhaps escaping the city in search of greener pastures, not having the support from the government may hinder some plans.