To judge from the figures, you would think Help to Buy is just for first time buyers.
Stats issued by the Treasury show that almost 8 out of 10 home buyers who took out a 95% mortgage through the Help to Buy mortgage guarantee scheme were first time buyers. Earlier reports suggest that the same is true for the equity loan version of Help to Buy. You can find a brief description of both schemes here.
In fact, the scheme is open to everyone – including existing homeowners – and it’s a bit of a mystery why so few movers are taking advantage of the scheme.
One of the attractions of a 95% mortgage (which is what Help to Buy is all about) is that it gives existing owners with little equity in their home the chance to move to a larger home if circumstances make that desirable.
Say, for example, that once you have sold you home you are left with £15,000. A mortgage that requires a 15% deposit would give you a maximum purchase price of £100,000. That probably means that its not worth moving.
But with the same deposit, a 95% mortgage would give you a maximum purchase price of £300,000 – which opens up a plethora of choices.
In short, a 95% mortgage can be the difference between staying put and moving to a home that could more easily accommodate a growing family.
And with the property market in the doldrums in recent years, I suspect that there are quite a lot of frustrated would-be movers – newlyweds, proud new parents and expanding families – trapped in a property that doesn’t meet their needs or aspirations.
So, why is Help to Buy being using almost entirely by first time buyers?
There are a number of possible answers and please do let me know what you think using the comments section below. But I can’t help thinking that part of the answer is that many would-be movers assume that Help to Buy is not for them. If that’s right, perhaps it is time to think again?