What Is A Help To Buy Scheme?
The Help to Buy is a government scheme which was first announced in March 2013. It is designed to help anyone who is struggling to save a deposit for their first home or move up the property ladder due to having limited equity. There are two ways you can benefit from the Help to Buy scheme, one being equity loans and the other being mortgage guarantee.
Equity loans are where the government lends first-time buyers and existing homeowners’ money in order to buy a newly-built home. A mortgage guarantee is where the government promises your lender that it will cover part of any losses they may sustain as a result of the mortgage being repaid.
Help to Buy equity loans are available to those who are first time buyers and existing homeowners looking to buy a new-build property. The government will lend you up to 20% of the property’s value, however, you will need to put down at least 5%, then get a mortgage to cover at least 75% of the property’s value. Using an equity loan has two major benefits, one being you will only need a 5% deposit and due to you only borrowing 75% rather than 95%, you will be able to access better mortgage rates.
The mortgage guarantee helps first time buyers or second movers who are needing to move up the property ladder to a bigger home. Buyers will need to raise 5% of the property value; the government will then provide a guarantee to the mortgage lender for up to a further 15%. This gives banks and building societies the peace of mind to lend larger mortgages at lower rates
The Benefits Of The Help To Buy Scheme
If you desire to move house but are struggling to afford the deposit, the Help to Buy scheme could make a big difference. The scheme has many benefits, including:
You get help buying a new home – The Help to Buy scheme helps many people get a foot onto or up the property ladder; this boosts the housing market, shifts new build homes and helps the wider economy. You need a smaller deposit – Although you will still have to save for a deposit to buy a home, the Help to Buy scheme is set at a more manageable level of 5%. This is much lower than many other mortgage options, enabling you to buy more quickly. Borrowing interest-free – An amazing benefit of the Help to Buy scheme is that you do not pay interest on your loan for the first five years. You will still be required to make mortgage payments during this time (these will include interest), however, no interest will be added to your Help to Buy loan. Access to cheaper mortgage rates – Borrowing less overall will mean you are more likely to qualify for a mortgage in the first place; due to this you are more likely to get a more competitive rate of interest than if you simply went for a standard 95% mortgage.
Get In Touch
If you would like to find out more information regarding the Help to Buy scheme and how it works, please don’t hesitate to get in touch with us today by calling
. We will be more than happy to answer any queries you may have. 020 8695 7548