A mortgage expert at a Lichfield financial business has branded a new Government right to buy scheme as an attempt to create a “huge distraction” from recent partygate controversies.
Boris Johnson unveiled the plans which could see claimants able to use their benefits as an income to help get a mortgage.
He said a review would look to create “better access to low-deposit mortgages”.
He said:
“We have a ludicrous situation whereby plenty of younger people could afford to make monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10% is a wholly unrealistic proposition for them.
“And of course the global rise in the cost of living is only making life harder for savers, so we want it to be easier to get a mortgage.
“Reporting back this Autumn, the review will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages.”
Boris Johnson
But Sabrina Hall, of Lichfield-based Kind Financial Services on Bird Street, said the ongoing costs of home ownership meant the plan did not add up.
“As it stands, I can’t work out how this would possibly work – it’s simply a huge distraction from partygate.
“Most people or families that rely on housing benefits don’t have much, if any, disposable income, so what happens if they purchase their own home and suddenly they need a new boiler, a roof repair or a replacement kitchen?
“Will the Government increase their benefits to cover the costs of maintaining their home? Is this about giving people financial security or cutting costs? A mortgage also requires additional costs such as buildings insurance.
“Also, while it’s not required, I would suggest that it wouldn’t be recommended to take a mortgage without life cover if it’s a joint mortgage so as not to leave a remaining party trying to repay the entire mortgage on a single income in the event of a death.”
“Again, is the Government going to factor all this into the benefits in order to encourgage homeownership?”
Sabrina Hall, Kind Financial Services
Levelling Up Secretary Michael Gove said that he was keen to see people able to use their benefits to help them purchase their homes.
“By extending right to buy and bringing forward the most comprehensive review of the mortgage market in decades, we are backing first-time buyers, breaking down barriers to homeownership and delivering on the people’s priorities.”
Michael Gove
But Sabrina said the uncertainty over the future of finances was an added complication that had not been fully considered.
“If a person’s circumstances change, will the Government look to improve the support package that they have for homeowners to reflect the fact that they have encouraged people to take out mortgages on these properties?
“Currently, you would only get support paying the interest on your mortgage – and only by way of a loan, which is repaid if you sell the property.”
Sabrina Hall, Kind Financial Services
