What is the Help to buy scheme?
The help to buy scheme gives people who are looking to buy a property a good chance to get on the property ladder, only asking for as low as 5% deposit. Almost anyone can apply for it from people who currently rent to people who are looking to move out from their parent’s house to have some personal space.
Chancellor George Osborne first announced the idea, however it has been estimated that it is going to cost the government around £3.5 billion to fund.
The scheme has two categories: Mortgage Guarantee and the Equity Loan.
- This category includes new builds and existing homes which you can apply for on the scheme
- The borrowers contribute a loan between 5% and 20% and the government loans the rest.
- The maximum house price someone can apply for under the scheme is £600,000.
- The scheme will only be running for three years.
- The equity loan only allows for people to apply for new homes, not existing homes unlike the Mortgage Guarantee
- The borrowers will contribute a loan of 5% whilst the government contributes a 20% loan and a commercial lender making up the rest.
- Maximum house price is £600,000 which is the same as the Mortgage guarantee scheme.
Who is eligible to apply?
- The person who applies must be able to afford the mortgage with no history of financial difficulties
- You must not let the property out to anyone else
- Your deposit cannot come from another government scheme
- You cannot own another house
Who are the lenders?
The lenders for the Help to buy scheme are:
- Bank of Scotland
- Virgin Money
What do the critics say?
The critics say that they believe the scheme will end up inflating house prices ending with the property market collapsing with large consequences.