Help to Buy Scheme

The Government's Help To Buy Guarantee Scheme provides various ways through which first-time buyers can save money at a faster rate, getting them onto the property ladder sooner than if they saved alone.

The scheme allows those with a 5pc deposit to apply for a 95pc mortgage. In return, the government will cover the risk of the lender with an insurance policy, protecting the buyer's mortgage.

Help to Buy ISA

Since December 2015, hopeful first-time buyers have been able to put their savings into a help-to-buy ISA. In return for monthly deposits of up to £200, the government will match your savings with a 25pc contribution of its own. You can save up to £12,000 of your own money and qualify for a £3,000 bonus when you use those funds on buying a house.

Equity loan

Equity loans are available to those with a deposit of just 5pc, as long as the property is a new-build (hasn't been lived in before) and only at a maximum offer of £600,000. The government will put forward a further 20pc of the purchase price, leaving you to secure the remaining 75pc as a mortgage.

You won't pay any fees on the 20pc government loan for the first five years, but will be charged a 1.75pc annual fee, which will rise each year by inflation plus 1pc. You will then pay back the outstanding fees either when the mortgage is paid off in full or when you sell the property, whichever happens first.

New Buy

You can participate in the new-buy offer even if you already own a home, but it can only be used on new-build properties worth up to £500,000 and with a 5pc deposit, and must have been completed by participating builders.

New-buy scheme properties are not available for shared ownership or equity purchases.

Mortgage Guarantee

Homeowners who are stuck on the property ladder can apply for a help-to-buy mortgage with a 5pc deposit on properties up to £600,000, getting a mortgage on the remainder of the property. The government will guarantee any mortgage borrowing above 80pc of the property's value.

Help to Buy eligibility

  • The scheme is only currently available for property purchases up to the value of £600,000 with a minimum 5% deposit.
  • The property purchased must be your main residence, not a Buy-to-Let property.
  • The scheme is open to new builds and existing home purchases in the UK.
  • Applicants must be over the age of 18 to qualify and meet the lender's eligibility and affordability criteria.
  • Applicants cannot own or part-own any other property.
  • The mortgage must be set up on a repayment loan, not interest only.
  • The mortgage cannot be set up as a shared ownership or shared equity arrangement.

Shared Ownership?

Separate from help-to-buy is shared ownership, which allows you to buy a percentage stake in a property with an option on the remainder of the property down the line.

If you have any questions about funding a house purchase, please contact your local Martin & Co office today.

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