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Help to Buy Mortgage

If you are a first-time buyer or you are struggling to move to your next home, you should be aware that assistance is available from the Government. The Help To Buy scheme was introduced to help people who have been toiling to step on to or move up the property ladder.

The good news is that the Help To Buy scheme has had a positive impact on many people’s attempts to buy property. Saving for a deposit is an important yet challenging task, and it is an area where many people are keen for assistance. With Help To Buy, it is possible to purchase a home with just a 5% deposit.

Who is the Help To Buy scheme for?

The Help To Buy scheme is primarily for people who believe they can afford monthly mortgage payments but who are struggling to save enough money for a deposit. The Help To Buy scheme aims to speed up the process of saving for a deposit. This scheme aims to offer an attractive and safe for mortgage lenders to provide more mortgages to a demanding market.

The criteria for eligibility for the Help To Buy scheme is:

• Hold savings to afford a deposit of at least 5%
• Looking to buy a home at no more than £600,000 – with a limit of £450,000 for those buying through the Help To Buy ISA
• Buying a home that will become your main property where you intend to live for most of your time

There is a range of Help To Buy schemes

There are three options to choose from with Help To Buy, and these are:

1. Help To Buy Equity Loan
2. Help To Buy London
3. Help To Buy ISA

This guide examines the three schemes, who they are aimed at and what the individual eligibility requirements of the schemes are.

Help to Buy Equity Loan

This scheme is available for first-time buyers and home movers, who can provide a 5% deposit. The upper price limit for the property purchase is £600,000 in England and £300,000 in Wales. This scheme is only applicable to new build properties.

The scheme operates with the Government providing 20% of the deposit for a new build home. The buyer needs to provide 5% of the deposit and arrange a 75% mortgage for the overall cost of buying a home. In return, the Government loan doesn’t include any fees for the first five years of home ownership. However, in the sixth year, homeowners start paying interest.

Buyers can fully repay the loan at any point while they are living the home, but it must be repaid within 25 years if the homeowner is still living in the house. If the house is sold before this point, the loan must be fully repaid when moving home.

To apply for a Help To Buy equity loan, the buyer must purchase the house through a registered Help To Buy property builder.

Help to Buy London

This scheme is available for first-time buyers and home movers looking to purchase in a London Borough, who can provide a 5% deposit. The upper price limit for the property purchase is £600,000 in England and the scheme is only applicable to new build properties.

The scheme operates with the Government providing 40% of the deposit for a new build home. The buyer needs to provide 5% of the deposit and arrange a 55% mortgage for the overall cost of buying a home. In return, the Government loan doesn’t include any fees for the first five years of home ownership. However, in the sixth year, homeowners start paying interest.

Buyers can fully repay the loan at any point while they are living the home, but it must be repaid within 25 years if the homeowner is still living in the house. If the house is sold before this point, the loan must be fully repaid when moving home.

To apply for a London Help To Buy equity loan, the buyer must purchase the house through a registered Help To Buy property builder.

Help to Buy ISA

The Help To Buy ISA can only be accessed by first-time buyers. With this scheme, the Government provides an additional amount on top of your savings up to 25%.

For every £200 the buyer saves each month, the Government will provide £50 up to a maximum of £3,000 on £12,000 savings. Upon opening the account, people can place an additional £1,000 into their account, on top of the monthly maximum of £200. Therefore, in the initial month, buyers can save £1,200.

The Government bonus is only provided upon the purchase of a house, and this money cannot be used for any other purpose. The upper limit of property price where the Help To Buy ISA can be bought is £250,000 while in London, the upper limit is £450,000.

The Help To Buy ISA scheme can be used on all properties, is not limited to new build properties.

With the Help To Buy ISA scheme only available to first-time buyers, people intending to use it should speak with their bank or building society. Not all banks and building societies provide this scheme but look around and try to find the provider who offers the best rate.

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