There are three ways you can use Help to Buy:
- Equity loan
- Help to buy ISA
- Shared ownership
If you are considering using the Help to Buy scheme, give one of our brokers a call as they explain the pros and cons as well as ensuring that you get the best mortgage offer to compliment Help to Buy.
Need to Know…
Equity Loan
This version of scheme means that you only require a 5% deposit to purchase a house. The government will lend an additional 20%, creating a total deposit of 25%. These is a maximum purchase price of £600,000 and this doesn’t apply to existing properties. Also, not all lenders offer the scheme and limited deals and rates are available so it is important to get the right deal. The application process for Help to Buy is complex and long but we will help you to complete the form and get the best deal.
ISA
If you are about to start saving to buy your first home or have already started, it could be a good idea to open a Help to Buy ISA. With this special type of ISA, the government will boast your savings by 25%. The maximum bonus you can receive is £3,000 (£12,000 of your own savings). The accounts are available for each first-time buyer so if you are planning to buy with a partner you could both receive the savings bonus, a total of £6,000. Help to Buy ISAs are available from a range of banks, building societies and credit unions. Our brokers will be able to tell you if this could be beneficial to you.
If you have already set up a Help to Buy ISA let us know and we will make sure that your bonus is included when you purchase your house.
Shared Ownership
If your household earns £80,000 or less a year and you are a first time buyer, or used to own your own home but can’t afford to buy one now, you could buy a Shared Ownership Home. Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. Later, you could buy bigger shares when you can afford to.
Not all homes are available on Shared Ownership, they are either new builds or ones which are on resale programmes from housing associations. Shared Ownership properties are always leasehold. Our expert team can help secure you the mortgage you need for your share of the home.
(helptobuy.gov.uk – Shared Ownership)
Other things you need to know
The 20% that you borrow from the government is interest free for the first five years and in the sixth year you will be charged a fee of 1.75% of the equity loan amount. Each year after year six, the fee will be 1.75% plus inflation as measured by the Retail Prices Index plus 1%. When you come to sell the property, you will have to pay the government back 20% of your current home’s value even if your property has fallen in value. If you want, you are able to repay the equity loan at anytime before you sell the property, without any penalty, so long as it’s in chunks of at least 10% of your home’s current market value.