What is it?
Help to Buy offers schemes aimed at helping FTBs and people wanting to move up the housing ladder and perhaps struggling due to negative equity or difficulties raising a deposit.
Why is it different?
Help to Buy offers support to people wanting to move up the housing ladder and perhaps struggling due to negative equity or difficulties raising a deposit.
Two schemes:-
“Equity loan” scheme
Buy a property worth say £150,000 with a 5% deposit £7,500 and then they can borrow a further 20% ‘free of charge’ for the first five years.
Deposit would be £37,500 and your mortgage would be £112,500.
Key benefit, does depend on your circumstances, is the interest rates you can borrow at with a 25% deposit are a lot lower than you can borrow with a 5% deposit.
For example search: 4.5% plus for 95% LTVs
For example search: 2.5% plus for 25% LTVs
Government effectively gives a guarantee to the mortgage lender. The loan is free for the first five years, then you have to pay it back at 1.75% + RPI link. As of April 1st 2013 this rate was cheaper than borrowing through a mortgage.
Eligibility
The equity loan scheme is for new build home buyers only and starts today 1st April.
You need a minimum of a 5% deposit
Only available for repayment mortgages
Still need to pass the lender’s credit and affordability checks
Up to purchases of £600,000, must purchase a minimum of 80% of the property’s value
Can be a FTB or trading up
Only for people who intend to live in the home ie the ‘Help to Buy’ scheme is not to purchase Buy to Let
Runs up until March 31st 2016
If your property increases in value and you sell in the future, the government will share in the percentage growth
Who runs the scheme?
Go to http://www.homebuy.co.uk/help_to_buy.aspx. Lots of other schemes, so do check out which is right for you such as Shared Ownership, Rent to Buy, Armed Forces, Disabilities, Right to Buy.
First Time Buyer Checklists
For more information and help on buying and letting a property, then sign up to Property Checklists for FREE to download our buy to let checklists:-
For more help on buying a property, buy our First Time Buyer Pack which include comprehensive A4 ‘how to’ guides, containing Dos and Don’ts, Factsheets, Checklists, Handy Tips and Forms, PLUS access to Kate and her team, by phone and email, for any queries you might have during your buy to let purchase or property project.
