"There may be no direct replacement for Help to Buy, but lender flexibility can play a significant role in aiding borrowers in achieving their new build dreams."
The Help to Buy scheme has undoubtedly played a significant role in the new-build market since its inception in 2013. To date more than 375,000 homes have been purchased with the assistance of an equity loan, with more than £23.7bn handed out in equity loans to borrowers.
However, Help to Buy is no longer a consideration, even with the completion deadline now extended to the end of May 2023. That leaves would-be buyers of new-build homes considering their options, and whether other Government support schemes will make a difference to their dreams of home ownership.
For some, the First Homes scheme will be worth closer consideration, given the ability to purchase a property at a discount of as much as 50% from its market value. For others, shared ownership will be a more affordable option, with the potential to staircase up their holding in the years ahead.
In truth, it is unlikely that there will be a true replacement for Help to Buy, a golden bullet that boosts the prospects of buyers hoping to purchase a new-build home.
Instead, the hopes of buyers will come down to other, existing schemes designed to support borrowers, and - perhaps most crucially of all - the attitude of individual lenders.
Finding reasons to say no
Lender flexibility is crucial for borrowers looking to purchase a new build home.
That’s true irrespective of whether they are utilising a Government support scheme or a type of mortgage that makes the most of family help, such as a guarantor, gifted deposit or our Family Assist product.
We know that there is no shortage of would-be homebuyers who are keen to get onto the ladder, but are held back because of the way some lenders look at affordability. It may be that the lender will not consider additional income sources, or because there is some other level of apparent complication in their circumstances.
This supposed complexity is only added to by the fact that the property is a new build, since we know that some lenders approach this form of property with a heightened sense of cynicism.
If lenders persist with overly stringent affordability assessments, and a particularly cautious eye when new build is involved, then borrowers of all kinds may struggle to access the funding needed for these purchases.
However, there remains a subset of lenders, like Mansfield Building Society, who put the focus on manual underwriting and understanding the intricacies of an individual case. By being more flexible and more versatile in the way we assess cases, we are better placed to support borrowers purchasing a new-build property, no matter how they plan to finance that purchase.
There may be no direct replacement for Help to Buy, but lender flexibility can play a significant role in aiding borrowers in achieving their new build dreams.
