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When everyone has a home

028 9024 5640: Housing & Debt Helpline for Northern Ireland

Help to buy Mortgage Guarantee Scheme brought forward

HM Treasury has announced that the Help to Buy Mortgage Guarantee Scheme is now open to lenders. The scheme offers a government guarantee to lenders in the hope that this will encourage banks and building societies to offer more mortgages to people with a small deposit.  To qualify for the scheme lenders must pay a fee to the government which will then guarantee 15% of the value of the loan.  Sir John Cunliffe, incoming deputy governer of the Bank of England has acknowledged that this scheme will need to be "watched very carefully" amid concerns that the scheme could lead to a new housing bubble. 

Who can use the scheme?

The scheme is available to first time buyers, people who want to move home and, in some cases, to people who wish to remortgage. Properties purchased under the scheme must have a value of less than £600,000.  Properties can be new builds or second hand.  The scheme can't be used to purchase a second home or a rental property. 

There will be strict affordability tests on applicants.  Lenders will also be expected to stress test applicants' ability to pay against interest rate rises.  HM Treasury has said that anyone who has had a county court judgment of more than £500 made against them in the last 3 years will not be eligible for the scheme. 

Applicants will need to have a 5% deposit. 

Who is offering mortgages in Northern Ireland?

The Ulster Bank is expected to announce its offering in the next few weeks.  Its parent company, Royal Bank of Scotland, has already announced particulars of its mortgage offer.  Halifax and Virgin Money and Santander also intend to offer the scheme.

Lenders are free to set their own interest rates and arrangement fees for their products. 

Further details on the scheme, including the mortgage guarantee scheme rules are available from Gov.uk

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This article was written on 10 October 2013. It should not be relied on as a statement of the current law or policy position. For help with housing issues please contact our helpline on 028 9024 5640 or use our online chat service at www.housingadviceNI.org.