What is Help to Buy?
With property prices rising, saving a 20% deposit seems like an impossible task. With Help to Buy you can eliminate this huge cost. Help to Buy is a government scheme which could make getting on to, or moving up, the housing ladder more accessible. It helps existing home owners and first time buyers purchase a home with as little as 5% deposit.
Who is eligible?
To be eligible you must;
- have a deposit of at least 5%
- be looking to buy a home worth £600,000 or less
- be purchasing a property you intend to live in most of the time (this means you can’t buy a property you intend to let out or use as a second home)
- be buying your only home
- Be either an existing home owner or a first-time buyer
There are two parts to the Help to Buy scheme
A Help to Buy equity loan is only available to people who want to buy a new build homes worth up to £600,000.
How it works
- The government lends you up to 20% of the property’s value as an equity loan;
- You’ll need a deposit of at least 5%;
- You’ll need to get a mortgage of 75% of the property’s value.
For example, if you want to purchase a home worth £200,000, the percentages would break down as:
- A £40,000 loan from the government
- A £10,000 deposit put down by you
- £150,000 from a mortgage lender.
The benefit to getting an equity loan from the government is that with a larger amount to put down, you’ll hopefully get a better mortgage rate from your lender.
The scheme is intended to increase the availability of mortgages at competitive interest rates for buyers with a minimum of 5% deposit. Most of the UK’s biggest mortgage lenders have signed up to offer Help to Buy mortgages, as well as smaller lenders.
How it works
- You’ll put down a deposit of at least 5%
- You can borrow up to 95% of the property’s price from a mortgage lender.
- The government will then guarantee any mortgage borrowing above 80% of the property’s value.
- For example, if you took out an 85% mortgage the government would guarantee to repay your lender up to 10% of its value if you defaulted.
At Edison Ford we have our own independent mortgage advisor, Mike Ford who can provide you with impartial advice and competitive mortgage rates from a whole market of lenders. Get in contact with us today to arrange a free consultation.