HOME ownership is firmly back on the Government’s agenda (not that it was ever really left off) after its brief dalliance with social housing; now it’s back on form with policy tweaks it claims will help more people onto the property ladder.
Alongside a review of what ministers claim is a new model of shared ownership — offering people the chance to ‘step up’ the portion of a property they are buying by increments of 1% — the Government has said it has closed a ‘loophole’ that will make it easier for homebuyers using Help to Buy to take out a 35-year mortgage.
Under the changes, which are taking effect immediately, the Minister of Housing, Communities & Local Government (MHCLG) said people will be able to reduce their monthly mortgage repayments by spreading their borrowing over a longer period.
According to the ministry, the move reflects change in the wider mortgage market, where the number of first-time buyers taking out a mortgage of more than 30 years has doubled in the last decade.
When re-mortgaging after two or five years at the end of a fixed rate period, Help to Buy homeowners were hitherto unable in practice to take out a mortgage that goes on for more than 25 years after the original property purchase date.
However, the policy change opens up the Help to Buy re-mortgage market for more lenders, giving customers more choice, and – it is claimed – potentially paves the way to more competitive deals.
“We are determined to open up the dream of home ownership to the next generation and our Help to Buy schemes have already been used more than 500,000 times by families to get a leg up onto the property ladder,” said housing minister, Esther McVey MP.
“I want our Help to Buy scheme to work for homeowners, so we are giving people the freedom and flexibility to take out longer mortgages, if it suits their needs.”
Will German, director of Help to Buy at Homes England, added: “Lenders told us our agreement to match or extend our equity loan to the main mortgage loan term was critical to giving them the confidence to offer re-mortgage products to Help to Buy customers.
“Under our new policy, if the customers’ re-mortgage runs for longer than the standard 25-year Help to Buy: Equity Loan term, then we will automatically extend ours.
“This move opens up the Help to Buy re-mortgage market to more lenders. It offers more choice, more options and better outcomes for these customers.”
Homes England worked alongside trade association UK Finance to develop this new policy.
Jackie Bennett, the organisation’s director of mortgages, said: “The new changes provide certainty for lenders and should also attract new entrants to the market, providing greater choice for customers who are looking to re-mortgage under the Help to Buy Scheme.”