Help to Buy

The help to buy scheme came into effect in April 2013 by the government to allow people to purchase a home, even if they cannot afford to pay a large deposit up front. The scheme was essentially created to boost the housing market and to give many first time buyers a helping hand with stepping onto the property ladder.

There are two options when purchasing a home through the help-to-buy scheme;

Equity Loan

This helps buyers secure a 20% equity loan to help fund their purchase, as long as they come up with at least 5% of the deposit, meaning they will apply for 75% mortgage. The loan will be charge-free for the first five years and in the sixth year, a charge will then apply, increasing each year.

Mortgage Lender Guarantee

Typically, mortgage lenders will only lend a maximum of 80% of the property value. Here however, the mortgage lender will get an insurance guarantee from the government which covers any amount exceeding this, allowing them to lend up to 95%. To make sure you are getting a good deal, it is important to seek independent advice from a mortgage advisor since all lenders will price their mortgages individually.

With a small deposit required, buyers can have more funds available to assist with other costs involved in buying a home. The scheme is available throughout the UK and not only just for first time buyers, but for anyone wishing to purchase a home.  With many lenders joining the scheme, this means there is a greater choice available for mortgage options.

To be eligible for the scheme buyers must;

• Have at least 5% deposit
• Be looking to purchase a home for £600,000 or less
• Use the property for their occupation and no other purpose.
• Not own any other property at the same time.
• Pass mortgage lenders basic criteria (income checks etc)
• Apply for a repayment mortgage
• Able to pay their own legal fees for completing the purchase