In addition, almost a third (31%) of consumers who are looking to buy or move admit they do not know whether there is a difference between a 95% mortgage offered by a lender which has signed up to the scheme and a 95% mortgage from a lender which hasn’t.
Paul Broadhead, head of mortgage policy at the BSA, said: “It is unsurprising that some consumers are finding the Help to Buy: Mortgage Guarantee Scheme difficult to get their heads round.
“The situation has been complicated by the launch of two very different schemes both called Help to Buy.
“It is essential that providers offering loans under the scheme leave applicants in no doubt about the terms of their mortgage loan.”
Alongside the confusion generated by the scheme the research revealed a number of assumptions made by buyers about the scheme.
Some 18% of first-time buyers and 17% of home movers believe that they can borrow more through this scheme than with a ‘standard’ 95% loan and 12% of both first-time buyers and home movers believe that their monthly repayments will be lower as a result of taking a Help to Buy.
One in ten first time buyers (just 5% of home movers) believe that the scheme will protect them if they cannot keep up their monthly payments and 12% of first-time buyers (just 6% of home movers) say that Help to Buy will protect them if their house price falls.
Broadhead said: “I am particularly concerned that a reasonable minority of active first-time buyers believe that they can borrow more than normal and that they are in some way protected – neither assumption is true.
“In fact a 95% mortgage through Help to Buy: mortgage guarantee is exactly the same as a standard 95% mortgage.
“It is vital that these myths are dispelled at application to prevent the possibility of consumers misunderstanding their mortgage loan and later feeling misled.”
