Young new homeowners plan to use Help to Buy

Thu 13 Mar 2014

<p><img style="float: right; margin: 5px;" src="https://static.zoopla.co.uk/zoopla_static_directnewsimage_large_(245909).jpg" alt="" width="300" height="300" />Almost half of potential new property owners this year aged under 40 are planning to use the Help to Buy scheme to help them realise their dream of home ownership, according to research by Experian.</p>

<p>Its report found that 39 per cent of people planning to buy their first home aged between 20 and 40 will apply to use the scheme.</p>

<p>More men than women plan to use the scheme, 43 per cent of men aged 20-40 compared to 34 per cent of women of the same age.</p>

<p>The majority are in their 20s, with 33 per cent aged 20-24 and 31 per cent aged 25-30.</p>

<p>The government announced that in the first three months of the scheme, from October, 6,000 people had put in offers for homes and applied for a Help to Buy mortgage.</p>

<p>Under the scheme, potential homeowners can buy homes up to the value of &pound;600,000 with a deposit of just five per cent backed by a government guarantee of up to 20 per cent of the mortgage.</p>

<p>The government reports that the average price of a property purchased through the scheme is &pound;160,000, the average income of an applicant is &pound;45,000 and the average monthly repayment is &pound;900, representing 23 per cent of a borrowers&rsquo; gross income.</p>

<p>The report from Experian said the average deposit saved is &pound;9,590 but 26 per cent of potential applicants this year have saved less than &pound;5,000, which is the minimum deposit required to take part in the scheme.</p>

<p>Experian also warned that many potential Help to Buy applicants have outstanding debts that could hamper their applications.</p>

<p>Experian said many potential applicants are unaware that database checks for loan risk assessments are used when applying for mortgage loans.</p>

<p>It found that the average applicant owes &pound;4,600, rising to &pound;5,240 for a 40-year-old.</p>

<p>The East Midlands has the highest level of credit owed at an average of &pound;5,800, with the South East having the lowest at &pound;3,940.</p>

<p>The report said that 40 per cent of applicants aged below 40 are not listed as living at their current address and warned this could adversely affect their credit rating.</p>

<p>An Experian spokesman said: "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.&rdquo;</p>