[ad_1]
Residents hoping to get on the property ladder using ‘housing benefit mortgages’ have been warned to go with caution.
Mortgage advisors have issued a warning after Prime Minister Boris Johnson announced his plans to turns ‘generation rent’ into ‘generation buy’ through several new schemes last week.
The Prime Minister has pledged to turn ‘benefits to bricks’ by changing welfare rules so that the 1.5 million people who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage.
However, mortgage and protection advisor Frankee Hearth, of Mortgage Advice Bureau, Spalding, says the scheme may not be as good as it sounds.
“Nine times out of ten this isn’t going to help anyone’s situation,” she said.
“Currently, benefits are taken into account when calculating affordability but you take the housing benefit off otherwise you’ll lose the mortgage offer immediately.
“This type of benefit can change dramatically. One month, you could get £1,000 and the next it could be £400.
“Income is taken into account with housing benefit and it can seriously affect what you get.
“It’s fine with something like Personal Independence Payment (PIP) or child benefits as that will not change.
“If someone is to change jobs and earn more, their housing benefit will disappear.”
Frankee is concerned that Mr Johnson’s idea will put extra strain on her colleagues and clients.
She said: “I don’t think it’s a good idea.
“It’s like the mortgage guarantee scheme – it’s a good idea in theory but I think lenders will be adverse to it. It’s not been thought out property and there’s a lot of information missing for lenders.
“Halifax is quite good in taking benefits into account but even then it can take ages to get a mortgage offer through which subsequently causes clients a lot of stress.
“All this will do is put a lot of pressure on advisers with people calling thinking they will be able to use their housing benefits and we will have to tell them that we can’t help.”
[ad_2]
Source link
