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Is Help to Buy a risky model?

Enable’s IFAs of Bishops Stortford know that when you are looking to buy your own home you want to be able to consider all your options. Help to Buy has been on the agenda for a while and recently the chief of Homes England has defended against claims that taxpayers could be overexposed to the risk of loss on its Help to Buy loan portfolio.

Homes England chief executive Peter Denton was recently asked about the level of risk that the taxpayer is shouldering through the Help to Buy equity loan scheme.

Conservative MP for Milton Keynes North Ben Everitt asked: “There was a National Audit Office report in 2019 that flagged that Homes England might be overexposed in relation to the scheme. Have you made an assessment of, in the event of a market downturn, how many of these loans would be written off and to what extent that would cost the taxpayer?”

Denton responded that the Help to Buy book was already valued in a “relatively conservative fashion” compared to the way that mortgage lenders value their loan and property portfolios. However, Denton said that Homes England’s analysts did have to make a value judgment as there were certain factors that make risk modeling more complex.

Denton added: “One of the biggest management judgments we have in our accounts is the valuation and approach to Help to Buy. For example, he said that normal housing market risk modeling would use Office for National Statistics house price data, however, an additional layer of analysis is needed for the Help to Buy book because the ONS index includes older properties as well as new-builds, whereas Help to Buy only covers new homes.

Enable’s IFAs can help you use the Help to Buys scheme to secure your new home and find a way to get yourself onto the housing ladder.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage


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