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14th February 2018

All about Help to Buy...

What is the Help to Buy Scheme?

 

The government backed Help to Buy scheme is a shared equity scheme. This means that alongside your mortgage loan you will also get a 20% equity loan in return for a share of any profits you make when it comes to selling your home or when you repay the loan. The benefit here is that the home buyer can secure the home with a smaller mortgage and deposit – making it easier for people to get onto or move up the property ladder. You will also own 100% of the property, so it is different from a shared ownership scheme where you might have a mortgage and pay rent.

 

Who can use Help to Buy?

 

It should be noted that Help to Buy is not just for just first time buyers who are looking to buy a new home;  you can use Help to Buy if you have owned before or currently own a home as long as when you buy the new home you sell your old one and it is your sole property. The scheme for example cannot be used by investors to own multiple properties.

 

You will need a minimum deposit of just 5% and meet the mortgage lender’s affordability criteria, you may be able to buy your new home using this scheme.

 

When do I repay the Loan?

 

The equity loan will need to be repaid after 25 years, or when you move, whichever happens sooner. There is nothing to pay on the equity loan for the first five years. In the 6th year, interest will be payable at a rate of 1.75% (increasing in subsequent years at RPI + 1% per annum).

 

What else should I know?

 

The scheme is available on new home developments only.

The maximum purchase price in England is £600,000.

You will not be able to sublet or part exchange your home.

 

How do I start the process?

 

Ask the developer where you are buying your new home or speak to your mortgage advisor who will need to fill out an application for you.

 

Where can I find out more?

 

The official Help to Buy website.

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