Homeowners who used the government’s Help to Buy mortgage scheme could be hit by expensive fees on their loans as they reach the end of their interest-free period.
The Help to Buy equity loan scheme was launched on 1 April 2013, offering buyers with a 5% deposit an equity loan of 20% towards a new build home – or up to 40% for properties in London.
This loan is interest-free for 5 years, after which borrowers must pay 1.75% on the value of their loan, which will increase each year by retail price inflation plus 1%.
As almost 5 years have passed since the scheme started, thousands of homeowners who took out loans early in 2013 will begin to pay the fees from 1 April 2018 onwards.
These fees will continue to rise unless borrowers are able to pay the loan off, usually by remortgaging their home.
According to the latest government estimates, a total of 120,864 properties have been bought using the Help to Buy equity loan scheme since its launch.
Of these, 2,103 were completed in Q2 2013, so this number of households could see their costs rise in the coming months.
Contact our Property team to discuss your property costs.