The Help to Buy house scheme was designed by the government for people who are struggling to buy a house in the UK, whether they are looking to move up the property ladder or purchase a newly built home.
The scheme works by bolstering the home buyers deposit, allowing them to take out a mortgage with only a 5 per cent deposit. Such a small deposit may not be acceptable when borrowing directly from a mortgage lender. Additionally, when borrowing on a smaller proportion of the house price, you may also receive a better rate.
If you are able to pay back the equity loan within the first five years, wherein any interest isn’t applicable, this scheme can also prove to be even more cost-effective.
Also, since the loan allows you to purchase houses up to the value of £600,000, you may find yourself able to afford a bigger and better home than if you had a smaller deposit. Another great benefit of this scheme is that, if your property value drops in the future you will pay less back, since the loan also relies on the percentage of your property’s value.
However, you must plan carefully before applying for a Help to Buy scheme. Consider the possibility that some things may not go exactly the way you planned them. For instance, if the price of the house increases in the future, this will mean that you will have to pay back more than you initially borrowed.
Make sure that you consider everything carefully and have fallback options before committing to buying through the Help to Buy scheme. Other available schemes like the Help to Buy house ISA and Mortgage Guarantee should also be factored into your consideration.