Rochdale homeowners could be left high and dry

Rochdale homeowners could be left high and dry

Rochdale homeowners who took advantage of a government scheme to help first-time buyers could be left high and dry, according to analysis by mortgage broker Private Finance. 

Rochdale buyers who purchased at the outset of 'Help to Buy' in 2013 are likely to owe the government more than they have gained, one of the worst areas of the country. 

In 2013 the average first-time buyer in Rochdale paid £96,067, the value of which had risen to £114,964 in 2017.

Original adopters of the scheme will start to incur interest on their loans this April, providing motivation for them to move up the property ladder. 

Borrowers in the scheme must repay 20% of the property value at the time of selling (rather than the original loan) - which in Rochdale means they could be out of pocket by over £9,000. 

Shaun Church, Director at mortgage broker Private Finance, commented: “Original adopters of the Help to Buy equity loan scheme are about to see their interest holiday come to an end. With five years having passed since scheme was created, it’s likely some of these borrowers are now looking to move up the property ladder, and the prospect of paying interest on their loan may give them the push they need. 

“Many Help to Buy homeowners will have experienced significant house price growth since they first took out their loan, but it’s a postcode lottery as to how much they will have left to play with once their equity loan is repaid. While most have done very well out of the scheme, our research shows that buyers in some areas, particularly in the North, are at risk of the amount they must repay outweighing their capital gains. 

“There are also challenges for those who want to stay in their Help to Buy home but switch to a different mortgage deal, as not all lenders under the scheme offer remortgage products. Help to Buy homeowners who are wondering what their next steps should be would benefit from seeking advice from an independent mortgage adviser who can explain their options.”