Homeowners helped buy mortgages warned of five-year ‘time bomb’

James Schofield, Director of LillyBrooke
James Schofield, Director of LillyBrooke

Homeowners across Northamptonshire who have taken advantage of the government’s Help to Buy mortgage program face a ‘payback period’ – with high charges on their loans looming once their five-year interest-free period ends.

The controversial equity loan program has enabled buyers to take advantage of a five-year interest-free government loan of up to 20% of a property’s value, helping thousands of families move up the housing ladder.

However, as these loans mature, customers have to pay increasing fees on these equity loans or come up with another plan.

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At the end of five years, borrowers must pay a fee of 1.75% of the value of their loan, each year increasing the retail price index plus one percent, unless they can repay the loan. , generally by depreciation.

Northampton-based financial services firm LillyBrooke has partnered with Franklin lawyers to provide a solution for homeowners who fear they won’t be able to make payments.

LillyBrooke Director James Schofield said: “For many, the Help to Buy program was a very attractive way to climb the real estate ladder, but the reality is it’s a time bomb. At the end of the five-year interest-free period, people are faced with a very nasty surprise.

“Having bought a new property myself in 2017 I’m pretty sure if I wasn’t doing the job I’m doing I would have misunderstood what will happen to my monthly payments in year six. .

“The explanations from the equity loan management company were vague and there is very little information online. There is a long and very complex 29 page document on the government website that clients can try to understand, but it is far from obvious. “

The Home Buyer’s Assistance Program only applied to new homes, and clients could have to pay hefty fees if they don’t have the equity in their home to remortgage, especially since New homes do not always increase in value at the same rate as others. houses.

The remortgage process is complicated and time consuming, forcing the client to contact banks and building societies and research the best available rates before contacting lawyers, surveyors, and the Help to Buy program and handling the whole thing. of the process themselves.

LillyBrooke and Franklin’s Solicitors have launched a new service where they will manage the entire process and clients will have a single point of contact, their own dedicated case manager.

The advisory and brokerage application fees are free, with the client then being able to repay the Purchase Assistance equity loan by changing lenders and increasing their current mortgage amount to cover both the existing mortgage and equity loan.

Mr Schofield said: “Many homeowners will have suffered financially during the pandemic. The last thing they need when they come out of the lockout is an unwanted increase in their monthly mortgage payments.

“We’re here to help people stay at home and give them the financial freedom to resume life as soon as the restrictions allow.”

For more details and a free, no-obligation quote call 01604 926212, email [email protected] or visit www.lillybrooke.co.uk

About Keith Johnson

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