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Help to Buy Mortgages

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What is help-to-buy?

Help to buy is a government scheme available for first time home buyers of new-built properties. This scheme is designed to help them in the purchase or qualify for mortgages for properties worth up to £600,000. This scheme is only available in England for the moment, with similar schemes available for people living in Scotland and Wales.

The purpose of this scheme is to help you, a first-time buyer, to buy a new-built property or secure a mortgage to get an existing property. You only need to put down 5% of the property value as a deposit.

What types of loans are there?

Help to buy equity loans

With equity loans, the government offers prospective buyers 20% of the value of the property as a loan. This means that a potential homeowner can take up a 75% mortgage with just a 5% deposit. The main advantage of this type of help to buy loan is that the buyer is not charged any loan fees for the first five years. From the sixth year, you will pay 1.75% of the loan value. The fee percentage increases in subsequent years until the loan term ends.

With equity loans, you will need to repay the loan in 25 years or if you decide to sell the property. If you sell the home before completion of the loan term, you will need to pay back the loan in the same percentage of the market value at the time you borrowed.

Help to buy mortgage guarantee loans

With this type of mortgage, the government does not issue equity. Instead, the government will guarantee the borrower for up to 15% of the borrowed amount. This way, the borrower is provided with a loan with 95% LTV (loan to value) ratio. This comes with a reduced risk which would not have been the case otherwise.

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What do I need to be eligible?

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Who can get help-to-buy mortgages?

This is a scheme for first time home buyers only. You need to be living in England, be able to put down the deposit and meet the minimum requirements. You also need a good credit score and a clean credit history.

Can I get help-to-buy and my deposit be gifted by a family member?

A gifted deposit can be used alongside an applicant’s own savings or as the sole deposit to complete a Help to Buy scheme application. Much the same as a regular mortgage applications, gifted deposits are a great way of applying for a mortgage if you haven’t got a 5% deposit or are looking for an improved interest rate by initially paying a larger down payment.

How do I get a help-to-buy mortgage?

Identifying and choosing your potential Help to Buy property is your first step… visit applicable new-build schemes and complete a reservation form which is needed alongside your application. A Help to Buy Property Information Form is also available and to be completed from the developer or online. We can then finalise your application after guiding you to the most appropriate lender that fits your circumstances and lifestyle.

How long will help-to-buy be available for?

The Help to Buy ISA closed to new accounts on 30 November 2019 – but if you opened your Help to Buy ISA before then you can keep saving into your account until 30 November 2029. This is the final date when accounts will close to additional contributions.