What is it?
The government has created the Help to Buy scheme to help first time buyers take their first steps on to the property ladder, or to help existing home owners move up the ladder.
There are a number of options available to help get you moving;
Help to Buy: ISA
If you are saving to buy your first home, then use a Help to Buy ISA. If you do this, you will benefit from the government boosting your savings by 25%. So as an example, for every £200 you save you will receive a government bonus of £50. The maximum government bonus you can receive is £3000.
Help to Buy: Equity Loan
With a Help to Buy: Equity Loan, the government will lend you up to 20% of the cost of buying your new build home, so by saving a 5% cash deposit yourself you will then only need take out a 75% loan to value mortgage to make up the rest. You won’t be charged loan fees on the 20% loan for the first 5 years of owning your new home*. For more information on this you can access the Help to Buy Guide on the governments website.
Help to Buy: Mortgage Guarantee
Under this scheme you will only need a 5% deposit. The government will guarantee up to 15% of the value of your home with the participating lender. This means the lender can offer you access to low-deposit mortgages ranging from 80-95% loan to value. As the government has guaranteed up to 15% of the 95% mortgage you will benefit from a wider range of mortgage products. As the buyer you will be fully responsible for your mortgage repayments.
For more details and a number of options that you may wish to consider, visit the Help to Buy government website.
London Help to Buy Scheme
To reflect the property prices in London, from February 2016 the government increased the Help to Buy: Equity Loan schemes upper limit from the standard 20% to 40%. This is applicable to all buyers looking to buy a home in all London boroughs. For more information on this scheme visit our Help to Buy London page.
*Help to Buy: Equity Loan
Unlike the mortgage amount borrowed, the Government’s loan is an equity loan so will rise and fall in line with the property’s value changing. The loan is interest free for 5 years. After 5 years the loan will be subject to an annual charge of 1.75% that will rise each year by the Retail Price Index plus 1%. The outstanding loan will need to be repaid upon sale of the property.
Terms & Conditions apply. Mortgage availability depends upon your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee will be payable for arranging your mortgage. Your Mortgage Consultant will confirm the amount before you choose to proceed.
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