While the HomeBuy scheme has been welcomed by Paymentcare.co.uk, it has said MPPI is essential for borrowers to prevent any risk of losing their home.
Shane Craig, managing director of Paymentcare.co.uk, said: “For people whose financial situation prevents them from buying a home on the open market, HomeBuy is a fantastic initiative.
“But it’s imperative that, having got that far, they have the safety net of MPPI in place to catch them should they take a tumble and find they can’t keep up their loan repayments.”
To qualify for the HomeBuy Scheme, borrowers must be existing tenants of registered social landlords or on the housing register, key public sector workers, such as teachers or nurses, or first-time buyers identified as being in need of assistance. The ownership of the property is shared with a housing association or local authority.
Paymentcare’s advice was backed by Steve Devine, director at Cardif Pinnacle, who said: “I think MPPI is an option, whatever your personal circumstances. You definitely don’t want to rely on state benefits and it’s realistic that those on lower salaries should take MPPI, as they often can’t afford payment protection insurance (PPI).”
But with high-street lenders providing joint fund equity loans through the Open Market HomeBuy option from October 2006, Paymentcare.co.uk said clients could be scared off by these lenders’ ‘over-inflated costs’.
However, Devine cautioned against this view. “It’s dangerous to think that all high-street lenders are expensive and brokers are cheap. It’s about looking at the product as a whole. Clients should ask whether the provider will be there for them in their time of need. It all comes down to personal preference.”
