How does Help to Buy work?
With a Help to Buy; Equity Loan the Government can lend you up to 20% of the cost of your new home. You’ll then only need a 5% deposit and a 75% mortgage to make up the rest of the value.
There are no loan fees charged on the 20% loan for the first five years of owning your home. You can pay back the loan at any time, or alternatively when you sell your home. If you still have the loan when you do come to sell, you will repay it at this stage. So if you initially purchased with a 5% deposit and 75% mortgage, you will repay 20% of the home’s value at the time you sell.
If you have not repaid your Help to Buy equity loan in full after five years, you will need to pay an interest fee of 1.75% of the amount of your equity loan at the time you purchased your property. This rises annually from the fifth anniversary of your equity loan by the increase (if any) in the Retail Price Index (RPI) plus 1%.
The benefits of Help to Buy
Take advantage of the benefits that are currently available:
• Only a 5% deposit* needed
• 20% interest free loan# for 5 years
• 100% ownership of your home
• Access to competitive mortgage rates†
• Buying is more affordable with lower monthly payments
The Help to Buy Scheme is only available to both first time buyers and previous homeowners until April 2021!
If you would like more information about the Help to Buy Scheme, we’ve picked out a few of the most useful websites below…
Official Help to Buy Website
This site gives a great overview of the scheme and includes details on the eligibility criteria for both the Equity Loan and ISA.
Money Saving Expert – Mortgage Schemes
This is a great resource for impartial advice about Help to Buy with a handy list of pros and cons.
Which – Help to Buy Explained
A clear, concise explanation of the scheme can be found in Which? ‘Mortgages explained’.