The Help to Buy mortgage guarantee scheme rules have been revised from 1st October. This is due to a loan to income (LTI) limit being introduced to mortgage lending by the Bank of England and to clarify restrictions on the use of mortgage indemnity guarantees.
The Help to Buy scheme allows lenders to take advantage of guarantees offered by the government for certain mortgages. The rules include the criteria for mortgages that are eligible for the guarantee scheme.
The following changes to the rules apply to any loans where the mortgage offer was not made before 1st October 2014.
- The value of the loan must be less than the borrower’s annual gross income multiplied by four and a half. Where there are joint borrowers, the loan value must be less than four and a half of the borrowers’ combined annual gross incomes.
- The loan must not be subject to a mortgage indemnity guarantee, insurance or similar product that is designed, in return for the payment of a premium or fee, to compensate the lender for losses resulting from the borrower’s default in respect of the loan.
Fraser Brown are on the panel of approved solicitors for the Help to Buy scheme, so please contact us for advice on this matter.