Financial News

  • 23 January 2014, 16:39

Help To Buy Scheme: Under 40s Rush To Apply

Nearly half of would-be homeowners under the age of 40 are planning to apply for Help To Buy assistance this year, a new study suggests.

According to research by Experian, 39% of those aged between 20 and 40 hope to apply for the Government initiative in 2014.

The report said the average deposit saved by them is £9,590.

There has been a flurry of applications in recent months.

In November, figures showed in the first month of the scheme's launch more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage - and by early January that had topped 6,000.

Under the scheme, which came into effect at the beginning of October, people can buy homes of up to £600,000 with a deposit of just 5% as the Government guarantees up to 20% of the mortgage.

The report warned that 26% have saved less than £5,000 - the minimum deposit required to take part in the scheme.

The research also indicated that many have burdensome credit outstanding that may hamper applications.

The study said the average credit owed is around £4,600, which increases with age, so that the average 40-year-old owes £5,240.

Regionally, the East Midlands has the highest credit owed (£5,800), with the South East the lowest (£3,940). Some 5% owed more than £15,000 to creditors.

But with lenders increasingly reliant on database checks for loan risk assessment, many of those wishing to become homeowners are unaware of the process.

The report said 40% are not listed as living at their current address, which will adversely affect credit ratings.

It said: "Those living in the East Midlands, Yorkshire and London proved the least likely to have their names on the electoral roll."

"Ensure everything is accurate and up-to-date. Simple issues like incorrect address details, linked accounts they may have forgotten about and not being on the electoral roll can hamper attempts to access a mortgage.

"Buyers should also play close attention to things like outstanding accounts that should be marked as settled."

Prime Minister David Cameron said he hoped 2014 would see "thousands more realise their dream of home ownership".

However, the significant take-up of the loans will further fuel fears of a housing bubble.

The scheme's expansion this year means two-thirds of the entire UK mortgage market will offer products under Help to Buy, bringing home ownership to a growing number of people.

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