The Ipswich Building Society has revealed that it will not count a borrower’s existing Help to Buy loan as debt consolidation when they are applying for a remortgage.

The Help to Buy scheme was introduced by the UK government five years ago to assist those who could afford mortgage repayments but struggled to raise a mortgage deposit. After the first five years, borrowers are charged interest on the loan portion, in addition to their existing mortgage on the remaining sum.

Today, many borrowers seeking to remortgage are unable to qualify for a loan or have their loan to value (LTV) capped by some lenders who consider the government equity loan as debt.

Ahead of the Help to Buy scheme’s five-year anniversary, Ipswich Building Society opened up its standard mortgage range to all Help to Buy remortgage applicants looking to graduate onto a standard mortgage product at up to 95% LTV.

Building on this, the Society has announced that it does not consider a borrower’s repayment of the government’s equity loan as debt consolidation, and therefore will lend up to 95% LTV to Help to Buy borrowers wishing to move away from their scheme.

Applicants will be assessed using the Society’s manual underwriting approach, where each application is examined on a case by case basis, taking individual circumstances into account as opposed to a fixed computer model.

The Society’s CEO, Richard Norrington, said: “We treat Help to Buy applicants seeking a residential loan the same as all remortgage applicants. There are no separate products or pricing structures, meaning that those leaving Help to Buy can access our main range of mortgage products.

We firmly believe that diversity in the housing market should be supported and are pleased to offer more choice to borrowers whose outstanding Help to Buy equity loan repayment may restrict them from remortgaging away from the scheme.”