Help to Buy honeymoon is over as fees rocket

FAMILIES who borrowed money through the Help to Buy scheme in the year it was launched are now getting a £10 million bill.

The controversial scheme was set up in April 2013 and offers loans from the taxpayer so house-hunters can secure a mortgage. Analysis shows 14,023 families took advantage of it in 2013 – borrowing £566 million interest-free for five years.

But with the interest-free grace period now ending, they have to pay £10 million in fees from next month, or an average of £700 each a year.

An annual charge of 1.75 per cent of the outstanding sum is applied in the sixth year. The charges then rise in line with the widely discredited RPI measure of inflation – plus an extra 1 per cent on top of that.

The number of families using Help to Buy has increased every year, as has the size of the typical loan, meaning they face ever higher fees as their interest-free period expires.

Paula Higgins, of the Homeowners Alliance, said: ‘This issue does mar the Government’s achievement. Charging higher costs to those people who needed a helping hand to get on to the property ladder in the first place seems … callous.’