View more on these topics

Advisers struggling to arrange protection for H2B 1 borrowers

Protection advisers are struggling to arrange life cover for borrowers who have bought through Help to Buy 1.

Under the first phase of Help to Buy, which launched in April 2013, borrowers with a 5 per cent deposit hoping to buy a new-build property can secure a Government loan worth up to 20 per cent of the property value. The loan is interest-free for five years and repayable on sale, with borrowers paying back 20 per cent of the sale price.

Last month, the Government extended Help to Buy 1 until 2020.

Plan Money director Peter Chadborn says: “On a regular repayment mortgage, we would arrange either a level term or a decreasing term policy. Obviously, as a borrower repays capital, the outstanding obligation is going down. But with the Help to Buy equity loan, there is a rising obligation attached to the mortgage. The 20 per cent that must be repaid to the Government will almost certainly be worth more at the point of sale than it was at the time of purchasing the property, so what do we do for that?”

Chadborn says advisers will be reluctant to “over-insure” clients for fear of a regulatory backlash in the future.

PruProtect head of account development Phil Jeynes says: “We always try to design protection products which meet specific client needs but creating a product based on a particular Government initiative could prove difficult, given that there are no guarantees on how long the initiative might remain in place.”


Smee in plea for patience

Council of Mortgage Lenders director general Paul Smee has urged the FCA to be patient with lenders as they may suffer “unintended technical breaches” in the early days of the new regulatory environment. Speaking last week at the trade body’s annual lunch in London, Smee said he does not expect big problems in the run-up […]


Bank of Scotland most complained about mortgage lender

Bank of Scotland has been named the most complained about mortgage provider between July and December last year – and agreed with the complainant in an astonishing 71 per cent of cases. The bank had 15,075 complaints off borrowers over the period, the most complaints for a mortgage provider by roughly 2,750. According to figures […]


Comment: Scrutinise your business to keep strategy on track

You can certainly say one thing about this industry – it is never boring but it is definitely challenging at times. Looking back to the heady days before the credit crunch, lenders wanted ever increasing market share, numerous new lenders were entering the market and many were slowly forcing criteria to reach new boundaries. We all […]


In my opinion: When litigants get court in the act

Following the introduction of more stringent means-testing earlier this year, fewer people are eligible for civil legal aid and there has been widespread concern over the rise of litigants in person. This was recognised by the Judicial Working Group on Litigants in Person in its report in July and particularly noticeable in relation to mortgage and […]


News and expert analysis straight to your inbox

Sign up