Mortgage blog: Confusion reigns with the Help to Buy scheme

Posted 23 December 2013

It was launched with a fanfare three months ahead of schedule but a new survey has found that a third of first-time buyers still don't understand how the government's flagship Help to Buy scheme works.

The initiative is aimed at people looking to get onto the property ladder or to move home and who only have a small deposit. However, new research published in the Daily Telegraph suggests that the people at whom the scheme is aimed simply don't understand it.

34% of first-time buyers don't understand Help to Buy

A new survey has found that 34% of people considering buying a home in the coming months do not understand the new phase of the Help to Buy scheme. The initiative was launched in October and offers state-backed mortgages to borrowers with deposits as low as 5%.

The Daily Telegraph reports that "some housing market pundits have put the confusion over Help to Buy down to the fact that two schemes which work very differently have been launched under the Help to Buy banner".

Keith Osborne, editor of, explains the differences between the two schemes. He says: "The first part of Help to Buy is aimed at people looking to buy a new-build home. This provides an equity loan to a buyer looking to buy a brand new house as their main residence.

"The second part of the scheme allows borrowers to take out a high loan-to-value mortgage. Here, the government provides a guarantee to the lender in order to encourage them to offer low-deposit mortgages. This is available to both first-time buyers and home movers on both new and pre-owned properties."

More needs to be done to address Help to Buy confusion

The survey of 44,000 people also found that even among those first-time buyers who claimed to understand the new phase of Help to Buy, nearly one quarter (23%) wrongly thought the scheme can be used only for new-build properties and one third (34%) believed it was just an extension of the equity loan scheme.

42% of home movers wrongly thought the second phase of the scheme was only for first-time buyers.

Miles Shipside, director of the company that carried out the research, said: "There's clearly a lot more that still needs to be done to make sure the maximum number of people who could benefit directly from the scheme or its knock-on effects can do so.

"To give first-time buyers more of a chance to get on the property ladder, and help give potential movers higher up the chain the confidence to move again, the confusion needs to be addressed."

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