The government has relaxed its own rules on Help to Buy in order to help first time buyers remortgage after their fixed period comes to an end.
In an extraordinary move that will see some home buyers signing up to mortgages that will not be repaid until they are well into their 60s, housing minister Esther McVey said the new H rules would give more buyers ‘freedom and flexibility’.
McVey has worked with trade group UK Finance to arrange the new Help to Buy deal, which will enable buyers to reduce their monthly payments and therefore make buying a home more affordable.
Until now, those buying via Help to Buy who wanted to remortgage after five years had to count their initial years of ownership in their maximum 25-year-long mortgage period, whereas now they will be able to remortgage for up to 35 years.
This follows the government’s offer to extend its equity loan interest in Help to Buy properties, when appropriate, in order to help remortgages get the green light.
McVey claims the changes reflect similar moves within the wider mortgage market to find novel ways to help first time buyers find ways to offset the UK’s sky-high house prices.
“Lenders told us our agreement to match or extend our equity loan to the main mortgage loan term was critical to giving them the confidence to offer re-mortgage products to Help to Buy customers,” says Will German, Director (left) from Homes England.
“Under our new policy, if the customers’ re-mortgage runs for longer than the standard 25-year Help to Buy: Equity Loan term, then we will automatically extend ours.”