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Help to Buy scheme is launched three months early

The Help to Buy scheme, which was announced in the Budget in april, has been launched three months earlier than planned. Help to Buy, a government initiative aimed at making buying a home more accessible for those with a smaller deposit, will allow people to take out a mortgage worth up to 95pc of the value of the property.

The way the scheme works is that the government uses taxpayer’s money to guarantee up to 15pc of the mortgage, after an initial 5pc deposit from the buyer, meaning the lender gets protection on up to 20pc of the value of the property, enabling them to lend to higher-risk buyers who have a lower value deposit. The scheme will be offered to anyone buying a home up to the value of £600,000 and was due to come into effect at the start of 2014. The total value of Help to Buy is estimated to be in the region of £12bn.

While the scheme will increase the availability of homes to those who would otherwise struggle to afford a move, critics believe that it could fuel an influx in buying and cause a ‘housing bubble’ where prices rise to the extent that most will be unable to afford a home.

A stark critic of the scheme, Business Secretary, Vince Cable, has expressed his concern over this in the past, and when questioned on the early launch of the scheme, he simply added: “My views on this subject are very well known and haven’t changed”.

However, Prime Minister, David Cameron, has again stuck by the scheme, and has highlighted his desire to make buying a home available to everyone. He said: “As prime minister I am not going to stand by while people’s aspirations to get on the housing ladder are being trashed. If we don’t do this it will only be people with rich parents to help them who will get on the housing ladder – that is not fair, it is not right”.

So far Royal Bank of Scotland and Lloyds Banking Group have signed up to the scheme.

Need advice? If you’re looking to buy a home and need help with your mortgage, contact one of our advisors. Our mortgage specialists have access to the whole of the mortgage market meaning they can get the best deal for you, and not just a solution from a limited number of providers.

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