Help to Buy

Help to Buy is a government backed scheme in the UK that aims to help first time buyers and home movers buy a new build or existing home priced up to £600,000 with as little as a 5% deposit. There are two parts to the scheme - equity loans and mortgage guarantees. Please read below for information on both schemes:

With the Help to Buy equity loan scheme, the Government will lend you up to 20% of the cost of your new home. The loan is provided by the Homes and Communities Agency and will be administered by your local HomeBuy agent. You will only need to provide a 5% deposit, therefore you would need a 75% loan to value mortgage. You can only take out a mortgage on a full repayment basis. The scheme is unavailable on interest only.

You will not need to pay any interest on the equity loan for the first five years. After five years you will start paying an annual fee either as a single payment or in monthly instalments. The fee starts at 1.75% per annum of the equity loan and will rise annually in line with the Retail Price Index (RPI) plus 1%.

If you come to sell your home, you will have to repay the same percentage originally borrowed, but of the current value and not the original purchase price. For example, if you borrowed 20% of a purchase price of £200,000 (equity loan £40,000) and the house subsequently increased in value to £250,000 at the time you sold it, the amount you would pay back would remain at 20% of the current value i.e. £50,000. Likewise, if the property had decreased in value from the date of purchase, you would owe less than you originally borrowed.

First time buyers and home movers are eligible for this scheme but to qualify, the house you are buying must be a new build and must be the only property you will own. Under the equity loan scheme you would not be able to enter into a part exchange contract with a home builder nor would you be allowed to sublet your property. The scheme is only available in England from house builders registered to offer the scheme. Similar schemes exist in Scotland, Wales and Northern Ireland.

This scheme has now closed to new applications, however, there are still some mortgage products available which only require a 5% deposit. If you would like to discuss your mortgage requirements, please contact us.

If you already have a Help to Buy mortgage guarantee product and would like further information or advice on what to do when the fixed rate term ends, please contact us. We are here to help.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE