Help Themselves Scheme

The news and media has been full of the ‘help to buy’ scheme that the Government has brought forward under the mask of ‘we must help more people to become home owners’.

 

In short, the Government will fund a 15% deposit interest free if the borrower puts down 5% and they can go to a lender to request the remaining 80%. This is all designed to ‘oil’ the first time buyer market and the housing market reinvigorated as a whole.

 

The reinvigoration will create demand for houses, the construction industry will bounce back and jobs will be created.

 

All too good to be true?

 

Oh yes. The Government has got a nice big fat angle on this one.

 

The Government will charge banks 0.9% of the total to be borrowed. That’s right, not the 15% they are funding but the additional 80% as well. Given that they have earmarked £130 billion for this scheme, the Government sets to make a cool £1.2 billion for the 0.9% levy. Not bad for simply being a middle man to give out money they don’t have.

 

Unless the mortgages go sour, the Government will literally clean up.

 

Question: If the Government is the winner, then who is the loser?

 

I’ll give you a clue……it is not the banks.

 

Answer: The Borrower. The banks will pass on the addition 0.9% charge to the first time buyer by way of a more expensive interest rate on the mortgage.

 

Remember the rules……don’t be fooled by the headlines……never trust a good thing from the Government!

 

There is always more than meets the eye!