Your Guide to
Help to Buy
What is Help to Buy? Help to Buy is a Government funded initiative set up to help first time buyers and those looking to move up the property ladder to purchase a property with a minimum personal deposit of 5% of the purchase price. Why has Help to Buy been set up? The Government is continuing its pledge to help more people across the country become homeowners. It is also concerned with increasing the supply of housing and low-deposit mortgages. There are two Help to Buy schemes – the “equity loan” and “mortgage guarantee”.
EQUITY LOAN EXAMPLE HOME AT £200,000 PURCHASE PRICE £10,000
5% Buyer deposit
£40,000
20% Government loan
£150,000 75% mortgage
When does the scheme start? The Help to Buy equity loan scheme became available on 1 April 2013. What properties are available on the scheme? This is available on new build properties only, up to the value of £600,000. Can I buy any new build property with the scheme? Some new build developments may not have Help to Buy available.
How does the “equity loan” scheme work? This combines the following: • YOU provide a personal deposit of a minimum of 5% of the property value • THE GOVERNMENT provides an equity loan of up to 20% of the property value • A BANK OR BUILDING SOCIETY provides a mortgage for up to 75% of the property value What interest rate do I pay on the Government equity loan? This is interest free for the first five years. After this period, a fee of 1.75% is payable on the equity loan. This will increase by the rate of inflation plus 1%. What rate of inflation will be used? Without getting too complicated, the Retail Prices Index (RPI) will be used, which is one of the recognised measures used by the Government to measure inflation. When will I have to pay back the equity loan? The loan can be repaid at any time within the term of mortgage or alternatively on the sale of the property, whichever is soonest. Who is the scheme available to? Help to Buy is available for both first-time buyers and existing homeowners. Can I use Help to Buy for a buy-to-let property? The scheme is only available on properties that will be occupied by the person or persons who have taken out the mortgage, who do not own any buy-to-let properties. Am I able to get an interest only mortgage using Help to Buy? The scheme is only available in relation to repayment mortgages.
MORTGAGE GUARANTEE 5% Buyer deposit Government guarantee
When does the scheme start? The scheme has started and lenders all have individual dates for when they are on board. However but the Government has announced that people will be able to start applying for the new mortgage guarantee from 7th October 2013.
95% mortgage
Why was the scheme date brought forward? To be able to offer the guarantees ahead of schedule, the Government wanted to allow lenders to start writing loans that will become part of the scheme once it opens. Because lenders know that they can purchase a guarantee on these loans when the scheme opens, it also means that they are able to offer high loan to value mortgages sooner. What properties are available on the scheme? This is available on new build and existing homes, up to the value of £600,000. How does the “Mortgage Guarantee” scheme work? • YOU provide a personal deposit of a minimum of 5% of the property value • THE GOVERNMENT and the BANK OR BUILDING SOCIETY then jointly guarantees up to the next 15% of the property’s value, in return for a fee paid for by the lender. • A BANK OR BUILDING SOCIETY provides a mortgage for up to 95% of the property value Why was the scheme date brought forward ? To be able to offer the guarantees ahead of schedule, the Government wanted to allow lenders to start writing loans that will become part of the scheme once it opens in January 2014. Because lenders know that they can purchase a guarantee on these loans when the scheme opens in January 2014, it means that they are able to offer high loan to value mortgages, sooner. Who is the scheme available to? • Help to Buy is available for both first-time buyers and existing homeowners • There will be tough checks to make sure buyers can afford their mortgage payments and the borrowers’ income will be verified. • The new mortgages will not be available to people with a history of difficulties making debt repayments. Can I use Help to Buy for a buy-to-let property? The scheme is only available on properties that will be occupied by the person or persons who have taken out the mortgage, who do not own any buy-to-let properties. Am I able to get an interest only mortgage using Help to Buy? The scheme is only available in relation to repayment mortgages.
Search on our web site for properties that match your financial criteria. Look for the
logo on the property pages haybrook.com/help-to-buy
You can discuss all of your property search needs and requirements with our teams in branch or on the phone 8am -10pm everyday Our staff will be able answer all of your questions regarding Help to Buy. Getting the right advice at an early stage is really important. Talk to the Help to Buy experts from Just Mortgages, who can help you through the entire process and provide independent mortgage advice too. Your home may be repossessed if you do not keep up repayments on your mortgage. Just Mortgages typical fee for arranging a mortgage is £495. The actual amount payable will depend on your circumstances.