Gocompare tells Help to buy borrowers to ‘go into any mortgage with their eyes wide open’

8th October 2013

The second phase of the Help to Buy scheme has now been launched in England and so far only the tax payer-backed banks have announced their rates and are taking applications.

Comparison site Gocompare.com has told borrowers applying for Help to buy mortgages to shop around, get expert advice and go into any mortgage with the eyes wide open. It says it speaks volumes that only banks with at least some state ownership have gone into the scheme so far.

RBS and Natwest are offering a two year, fixed rate mortgage beginning at 4.99% for those with a 5% deposit, with no fee, while Halifax will be taking applications in a few days at a rate of 5.19%, for those who have a 5% deposit, but with a fee of £995.

Other major banks and building societies such as HSBC and Virgin Money said they would join the scheme in a few months.

Gocompare.com’s mortgage expert, Steve Williams said: “It speaks volumes about Help to Buy that other major lenders haven’t signed up to the scheme yet. There is a definite sense that they are waiting to get some clarity on how the scheme will work and to see how many people apply for the mortgages.

“A 95% loan to value mortgage is very rare in the current market, but the rates on offer are still relatively high when you consider that there are other deals out there at the moment offering interest rates as low as 1.99%* to 2.5%** for a two-year fixed mortgage. However, to get that rate you would need a 65% to 75% deposit.”

Steve added: “Even if you haven’t got a large deposit you still need to shop around, examine the market, get some expert advice and make sure that this is the right mortgage for you.

“But, if you have already saved as much as you can for your deposit, and a 95% mortgage won’t stretch your monthly outgoings, then Help to Buy is definitely worth considering, but go in with your eyes open. This scheme isn’t a panacea for the housing market and it may not be for you either.”

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