What is Help to Buy?
The Help to Buy scheme is designed to help people get on the property ladder or buy a new home without a large deposit. This government scheme has four parts: Help to Buy mortgage guarantees, Help to Buy equity loans, London Help to Buy and Help to buy Isas.
In this guide, we give an overview of how each part of the Help to Buy scheme works.
Help to Buy scheme: Do I qualify?
To be eligible for Help to Buy, you must:
- Have a deposit of at least 5%;
- Be looking to buy a home worth £600,000 or less (different limits apply for Help to Buy Isas);
- Be purchasing a property you intend to live in most of the time (ie not a property you intend to let out or use as a second home).
Help to Buy Mortgage Guarantee
Help to Buy mortgage guarantees can help home buyers unlock better mortgage rates. Most of the UK's biggest mortgage lenders have signed up to offer the guarantees, as well as smaller lenders.
The Help to Buy mortgage guarantee works like this:
- You put down a deposit of between 5% and 20%, and borrow the remainder from a mortgage lender
- The government will guarantee any mortgage borrowing above 80% of the property's value - for example, if you took out a 95% mortgage the government would guarantee to repay your lender up to 15% of its value if you defaulted
- The property can be old or new-build
- You don't have to be a first-time buyer to qualify
Help to Buy Equity Loan
Help to Buy equity loans are among the most popular routes into home ownership, and are only available to people who want to buy a new-build property.
Help to Buy equity loans work like this:
- You put down a deposit of at least 5%
- The government lends you up to 20% of the property's value as an equity loan
- You take out a mortgage on the rest of the property's value (so, if your deposit was 5% and your equity loan was 20%, you'd then take out a 75% mortgage).
London Help to Buy
This works in the same way as Help to Buy equity loans, but buyers in London can borrow 40% of the property price from the government rather than 20%. London Help to Buy will be available from early 2016.
Help to Buy can be a little confusing. But with over 10 years experience we can help ensure your Help to Buy runs smoothly and efficiently. Call today us today 01733 203873 for a free no obligation quotation.
Below are the different types of help to buy options: