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Mutuals cold on Help to Buy scheme

Building societies have so far shunned the Government’s Help to Buy scheme.

In last month’s Budget, chancellor George Osborne announced the Government will commit £3.5bn towards shared equity loans over the next three years to support up to 74,000 homebuyers.

Borrowers must have a 5 per cent deposit to secure a 20 per cent Government loan. The loan is interest-free for five years, after which a fee of 1.75 per cent is payable, rising annually by RPI inflation plus 1 per cent. 

The loan is repayable on the sale of the property. To qualify for the scheme, which launched this month, homes must be worth less than £600,000.

The scheme replaces FirstBuy, which was only available to first-time buyers.

Some of the UK’s biggest mutuals, including the Co-operative, Coventry, Yorkshire, Bath, Leeds, Newcastle, Skipton and West Bromwich, say they have no immediate plans to sign up to the scheme.

Nationwide says it is reviewing its options, while Teachers Building Society says it is in the process of developing a Help to Buy product.

Mortgage Concepts Associates director Mike Richards says: “This will impact on the success of the scheme. I am sure the Government expected the majority of lenders to provide Help to Buy mortgages when it was launched.”

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