There are currently two Help to Buy schemes available – Help to Buy Equity Loan and Help to Buy Mortgage Guarantee.
You need a 5% deposit for both schemes, and they are offered to first time buyers and existing homeowners.
Help to Buy Equity Loan
You can get a Help to Buy Equity Loan on new build homes up to £600,000 in England and £300,000 in Wales. You’ll only need to secure up to a 75% mortgage from a bank or building society. The Government will lend you an equity loan up to 20% of the property value, which can be repaid at any time during the loan term or on the sale of your home. In England and Wales, you won’t be charged any loan fees for the first five years of owning your home. Plus, there is a range of competitive mortgage rates available, which means you’ll be able to find something that suits your budget.
Help to Buy Mortgage Guarantee
You can get Help to Buy Mortgage Guarantee on new build homes and older homes of up to £600,000 in England, Scotland and Wales. You’ll need to secure up to a 95% mortgage from a participating lender. The lender can now offer this higher loan to value mortgage as the Government will provide them with a guarantee of up to 15% of the property value.
Help To Buy – FAQs
Is Help to Buy only for first-time buyers?
Help to Buy is available to both first-time buyers and existing homeowners.
What is Help to Buy?
Help to Buy is a Government backed scheme which helps first time buyers and existing homeowners purchase a home with as little as 5% deposit. There are two ways to purchase a property with Help to Buy, either with an Equity Loan or Mortgage Guarantee.
What are the differences between Equity Loan and Mortgage Guarantee?
|Equity Loan||Mortgage Guarantee|
|Type of home||New build homes only||New and old homes|
|Government Equity Loan||Up to 20%||–|
|Maximum purchase price||£600,000 in England
£300,000 in Wales
How does the Equity Loan work?
A Help to Buy Equity Loan provides you with an equity loan of up to 20% of the property value which can be repaid at any time within the first 25 years (or the terms of mortgage), or alternatively on the sale of the property. In England and Wales, you won’t be charged any loan fees for the first five years of owning your home. In the sixth year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%. Fees don’t count towards paying back the equity loan. With a Help to Buy Equity Loan, you only need up to a 75% mortgage; but with a Help to Buy Mortgage Guarantee, buyers will need up to a 95% mortgage.
Why has Help to Buy been set up?
The Government is continuing its pledge to help more people across the country become homeowners, by making more low-deposit mortgages and new housing available.
Am I able to buy a house under the new scheme?
If you have a 5% deposit you will be able to buy a new home under Help to Buy subject to mortgage approvals.
What is the maximum property purchase price?
The maximum home purchase price with a Help to Buy Equity Loan is £600,000 in England and £300,000 in Wales. The maximum home purchase price with a Help to Buy Mortgage Guarantee is £600,000 in England, Scotland and Wales.
Can I use Help to Buy for a buy-to-let property?
No, the scheme is only available on properties that will be occupied by the person or persons who have taken out the mortgage.
Am I able to get an interest only mortgage using Help to Buy?
No, the scheme is only available in relation to capital repayment mortgages.