Help To Buy

What is help to buy?

This scheme is designed to help those with 5% deposits and wish to purchase a new build property get on the housing ladder. The Government lends you up to 40% of the property price * and after five years you’ll have to start paying interest on the loan.

*40% only available within London boroughs. 20% is available if it is not within a London borough.

Am I eligible?

First-time buyers and home movers with a deposit of at least 5% and that qualify for a mortgage on the remaining amount minus the HTB loan. The scheme is due to run until 2021.

Does this apply on all properties?

A home worth less than £600,000 (£300,000 in Wales).

How to apply

You will need to search for your local Help to Buy housing agent. Government lends you up to 40% of the property value (interest-free for the first five years). This substantially reduces the monthly costs in the first five years and should give you access to cheaper mortgage products, as you may only need to borrow 55% of the value from the lender. (55% mortgage +5% Deposit + 40% HTB Loan?.

The Government will own up to 40% of the property value. You will need to pay this back at the end of the mortgage or when you sell, and after year five, you start paying interest on it.

Although the property is in your name, you’ll also need to seek approval from the Help to Buy agent in certain circumstances, eg, extending or altering the property, or the price you sell for.

When do I pay the loan back?

It must be repaid when the house is sold or at the end of your mortgage term – whichever comes first. The Government will take up to 40% of the sale price, whether higher or lower in monetary terms than the amount lent. You can also pay back some or all of your equity loan early without selling your home.

Which lenders offer Help to Buy mortgages?

Most lenders are offering Help to Buy mortgages however you would need to speak with your mortgage broker or bank directly.

How this works:

Buy a home for £400,000 under the Help To Buy equity loan scheme, you pay £20,000 (5%) and get a mortgage for £220,000 (55%). The Government loans you the final £160,000 (40%).

In Summary

Minimum 5% deposit

New-build homes only

First-time buyers or home movers

Equity loan of up to 20%

Maximum property value £600,000

Must be your sole home

Scheduled to close in 2021