Help to Buy Scheme. All what you need to know

By July 12, 2016Blog, News, Uncategorized

Find all what you need to know about the Help to Buy Scheme.

What is it?

 Help to Buy is a government scheme which can help you to buy a property with just a 5% deposit. There are two ways to make use of the scheme:

  • Equity loans.
  • Mortgage guarantee.

EQUITY LOANS

 How does it work?

The government lends first-time buyers and existing homeowners up to 20% of the sale price towards a newly built home. You borrow the rest (up to 75%) from a mortgage lender, on a repayment basis.

Who can apply for it?

  • people living in England, Wales, Scotland and Northern Ireland
  • buyers with a deposit of at least 5% of the purchase price
  • first-time buyers and existing homeowners who are moving
  • new or old properties selling for up to £600,000

Who cannot apply for it?

  • second home buyers
  • properties you intend to rent out
  • anyone who is using or going to use another home buying scheme

What interest will be charged?

Years 1-5: no fees
Year 6: 1.75% of the loan
Year 7 onwards: 1.75% + RPI + 1% (after the first seven years, the fee rises by inflation based on the Retail Prices Index (RPI) plus 1% each year. RPI figures are put together by the Office for National Statistics)

These fees do not go towards paying off the government loan. When you sell your home, or the mortgage is paid off, you have to repay the equity loan plus a share of any increase in the value.

You can also pay back part or all of your loan at any time. The minimum percentage you can pay back is 10% of the market value of your home. The amount you pay will depend on the market value at that time.

How do I find an equity loan?

Speak to the Help to Buy agent in your local area or a local developer who is registered with Help to Buy.

MORTGAGE GUARANTEES

How does it work?

The government promises your lender that it will cover part of any losses they may sustain as a result of the mortgage not being repaid.

Who can apply for it?

  • people living in England, Wales, Scotland and Northern Ireland
  • buyers with a deposit of at least 5% of the purchase price
  • first-time buyers and existing homeowners who are moving
  • new or old properties selling for up to £600,000

Who cannot apply for it?

  • second homes
  • properties you intend to rent out
  • anyone who is using or going to use another home buying scheme

How do I get a mortgage guarantee?

Most major lenders are now offering mortgages under the Help to Buy guarantee scheme.

Be aware that the lender will check you can afford mortgage repayments. You are still responsible for paying the mortgage in exactly the same way as any other mortgage.

Using a mortgage guarantee for remortgaging

If your home’s value has dropped or if you owe your existing mortgage lender 95% of the cost of the value, a few lenders are offering mortgage guarantees to those looking to remortgage.

How can we help?

We provide RICS compliant Market Valuation Reports for loan redemption or stair casing applications for the Governments help to buy schemes across London and the South East. We also provide Market Valuation for Sale and staircasing applications (with and without tenant improvements) for several Housing Associations including Thames Valley, Notting Hill Housing Partnership, Wandle Housing Associations and more.

Contact us now for a fixed valuation fee and fast turnaround. Inspections for urgent valuations within 24 hours available by request, subject to availability.