Help to buy scheme mortgages
The Government’s Help to Buy scheme was launched in April 2013 and is designed to help those who cannot afford a deposit of more than 5% get onto the property ladder. Since its launch, it has already helped thousands of people move into new build properties.
Working with a wide range of new build developers over the years we have helped many clients utilise the Help to Buy scheme since its inception. Our team’s knowledge of the market means that we are ideally placed to provide advice and guidance on this and other schemes available to help first-time buyers.
At Key Solutions Mortgages, our advisors have a broad range of experience helping people secure mortgages with the help to buy scheme.
How does the Help to Buy equity loan scheme work?
If you’re a first-time buyer looking to purchase a new build property but are unable to afford a deposit larger than 5%, you may be eligible for the Help to Buy equity loan scheme. On the condition that you contribute a deposit of at least 5%, the Government will lend 20% of the purchase price as a loan to you. This loan is interest-free for 5 years.
You will then need a mortgage for the remaining 75% of the property (a loan to value which gives access to more competitive interest rates). Once you reach the sixth year of your loan, you will start paying interest at 1.75% on the government’s 20% loan – this rate will go up each year by any increase in the Retail Price Index (RPI) plus 1%.
You should be aware that the Government’s stake in your home will always be 20% until you repay it – meaning that if your home rises in value, so does the stake the Government owns. The loan can be repaid in full at any time. However, it must be paid off in full after 25 years, or if you move house. Those living in London qualify for further support, with the Government granting an equity loan of up to 40% of the value of the property under the same terms as above.
Check your eligibility
To be eligible for the Help to Buy equity loan scheme, you will need to meet the following conditions:
- You must be able to provide a minimum 5% deposit on the property.
- The property you are purchasing must be a new build property and be sold by a Help to Buy registered homebuilder.
- The maximum value of the property cannot be over regional price caps (these vary across the UK)
- The property bought must be the only property you own.
If you are considering utilising the help to buy scheme to purchase your first home, get in touch with us to help check your eligibility and support you with obtaining your first time buyer mortgage. You can contact us on 0800 138 5856 or get in touch below.
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