21 October 2013

What Is The “Help To Buy” scheme?

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From October 2013, the “Help to Buy” scheme has been extended to make it possible to purchase any property under £600,000 – be it a new build or pre-owned home – with as little as a 5% deposit.

The process of applying and repaying the mortgage is the same as it would be for a standard mortgage – there really is very little difference for the buyer. The scheme is intended to increase the availability of mortgages at competitive interest rates for buyers with a minimum of 5% deposit. The government are going to make this possible by guaranteeing repayment of the mortgage to the lender, this will be dealt with behind the scenes by participating lenders. There will be no additional paperwork or charges for the buyer.

Below is a quick checklist of who is eligible for the scheme:

You won’t be charged loan fees on the 20% equity loan for the first 5 years of owning your home. In the 6th year you will be charged a fee of 1.75% of the loan’s value, which will increase every year by the retail price index plus 1%.

The government have rather unexpectedly launched this scheme and as a result, many lenders have been caught off-guard. There are still many lenders who do have not signed up to the scheme. However, if you would like to find out more and would discover if you qualify for the scheme, call any one of our local branches and our in-house mortgage consultants will be more than happy to provide you with friendly and impartial advice.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.