Help To Buy Property

how to acquire help to buy property, where to get help to buy property scheme, what to consider for help to buy property

How Does Help To Buy Property Work?

Whether you’re purchasing your very first home or looking to move to a better one, purchasing a new property can prove very costly. Luckily, the UK government is more than willing to provide aid via the Help to Buy Property scheme.

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All firms are regulated by the Solicitors Regulation Authority or the Council for Licensed Help To Buy


Help To Buy
help@helptobuy.org.uk
0800 009 6634
1st Floor, Suite 2, 40 Charlotte Square, Edinburgh, EH2 4HQ
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Rated Excellent
Based on 1,206 reviews
Understanding & listened to our requirements

We found so far that they listen & understand our requirements, all ways available to answer any questions that we have had. Like most people who only get chance to check emails after work, when sent or responded to there emails they answer promptly at evenings & weekends. This is the 3rd time we have used the mortgage company and they meet our requirements.

Steve & Amy
Caroline & Nasreen were both very…

Caroline & Nasreen were both very informative and kept me updated all the way through. I had full trust in them right from the beginning. Would definitely recommend and hope to work with them again in the future.

Dexter
I was supported right from my first…

I was supported right from my first contact. I am going through a divorce and needed quick responses...I was accommodated and supported at all times. My Account Manager Fiona has gone above and beyond her required services.

Tanya Geldard
Well what can I say from start to…

Well what can I say from start to finish I have had exemplary service Suzy and her team have been amazing keeping my spirits up when I needed a boost and such a friendly knowledgeable manner I would certainly recommend to friends and family and would use again but sincerely hope I don’t need to.

Karen Rich
Fantastic service from Jo and Matt

Fantastic service from Jo and Matt. We have been struggling for a few years to get a mortgage but Jo was able to achieve this for us. We are really grateful.

Mrs Marais
Excellent service as usual

Excellent service as usual! Matt and Jodi are amazing! Thank you soo much for your help and answering my crazy questions.

Lisa Tilbrook
First Class Customer Service

Just completed on my first home. A massive thank you to Chris Summerson who found me exactly the mortgage deal I was looking for. Professional and friendly service throughout.

Graham Holbrook
Absolutely Outstanding Service

Jodi has been utterly brilliant and the service provided absolutely perfect, worth every penny. I urge any first time buyer to use The Mortgage Broker Ltd, it just takes all the stress and confusion out of the process and gives you access to an expert who can answer all of your questions honestly and with ease.

Alex H
Such a Positive Experience!!!

Such a positive experience!!! Would recommend it to anyone. Oliver had so much patience with me what is much appreciated. Guys are happy to answer all your questions and are happy to help / explain all documentation which I always struggle with. I'm hoping to hear from them again in about 18 months . Thank you Oliver!

Gosia Olejnik
Excellent and Fast Service

We used the mortgage broker to source a remortgage for our buy to let property. They were very professional and we were very delighted with the deal and service we got from them. Fiona and Becca also kept us updated on the progress of the application and we were able to complete the whole process under 30 days. Highly recommend them to anyone looking for a mortgage broker.

Ade G

Over the years, at least 235,000 houses have been purchased with the aid of a Help To Buy equity loan in England alone, and a whopping 80 per cent, or 192,000, of those were purchased by first-time buyers.

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Advantages Of The Help To Buy Housing Scheme

With the Help to Buy Equity Loan, the government can lend you a significant percentage of your newly built home’s total value – up to 20 per cent in England and as high as 40 per cent in London.

This Help to Buy for Any Property Assistance is only available in England as other governments in the United Kingdom run their own schemes, lending up to 15 per cent in Scotland and 20 per cent in Wales.

The scheme allows buyers to secure new-build Help to Buy scheme properties with just a 5 per cent deposit and a mortgage loan-to-value ratio of up to 75 per cent. Additionally, there will be no interest charged on the 20 per cent loan within the first five years of owning your home.

Take, for instance, a home with a £300,000 price tag. The buyer’s 5 per cent deposit is £15,000, the government’s 20 per cent loan is £60,000, and your commercial lender’s 75 per cent mortgage is £225,000.

For a home in London with a £500,000 value, £25,000 is the buyer’s 5 per cent deposit, £200,000 is the government’s 40 per cent loan, and the remaining £275,000 is the 55 per cent mortgage from your commercial lender.

Paying Back The Help to Buy Equity Loan

Within the first five years, no interest is payable, although there is a £1 management fee by Direct Debit charged monthly.

In the sixth year, buyers must begin to pay a monthly 1.75 per cent equity loan interest in addition to the management fee. This interest fee may increase annually, as dictated by the Regional Price Index (RPI), plus an additional 1 per cent until your loan is paid in full.

The amount that you will receive is calculated as a percentage of your new homes’ valuation at the time of purchase. However, the amount that you repay is calculated based on a percentage of the current value of your home.

This means that once the value of your property increases, the amount you owe on your equity loan will also increase. Similarly, the amount you owe on your loan will decrease if your home depreciates in value.

The equity loan is to be repaid in full when you pay off your mortgage, when your equity loan term comes to an end, or when you decide to sell your home.

However, you also have the option to pay off your equity loan early, in full, or in 10 per cent instalments before your loan period lapses.

You may use this example calculation as reference:

  • Repaying a 20 per cent equity loan where the property value has increased

You purchased your Help to Buy used property for £250,000 and sold it for £260,000. The 20 per cent equity loan you need to repay is £52,000, and £195,000 is the 75 per cent mortgage you need to pay off.

  • Repaying a 40 per cent equity loan where the property value has increased

You purchased your house for £450,000 and sold it for £460,000. The20 per cent equity loan will be repaid as £92,000, and £345,000 is the 75 per cent mortgage you need to pay off.

Help To Buy Equity Loan Eligibility

The equity loan is applicable for both first-time buyers or if you need help to buy if you own a property. The house you want to purchase should be newly built with a market value of no more than £600,000.

Once you purchase your new home with the help of an equity loan, you should:

  • Not own any other property or participate in an exchange deal involving your old home
  • Not rent or sublet the property
  • Be able to afford the monthly recurring fee and interest payments

It is also an excellent idea to seek the advice of an independent financial advisor to help ensure that you are making the right choice, especially if you can afford a mortgage without the assistance of the Help to Buy Equity Loan scheme.

Buying a new house can be overwhelming, especially if you’re doing it for the first time. Seeking the help and advice of experts can save you a lot of time and unnecessary effort.

Please keep in mind that the Help to Buy scheme doesn’t include financial and legal advice, nor builder mediation services. What we can do is point you in the direction of organisations that provide free and impartial advice on these matters.

How To Apply For The Help To Buy Equity Loan Scheme?

Registered house builders advertise Help to Buy properties that are for sale. For a fee of less than £500, you can reserve your home with the house builder.

After making the reservation, get in touch with a Help to Buy agent to get assistance in applying for your equity loan and check if it’s within range of your budget. Appointed by the government, these agents will guide you throughout the process of making the purchase.

In addition, you can also seek independent advice from professionals. A solicitor will be able to assist in checking your equity loan agreement and prepare the legal documents required to complete the purchase of your home. A financial or mortgage advisor can help make the necessary arrangements for your mortgage.

Please note that the existing Help to Buy Equity loan, available for first-time buyers and home movers is available until 31 March 2021.

A brand-new Help to Buy scheme for first-time buyers only will be underway on 1 April 2021 and will run until 31 March 2023. Eligibility requirements are already up, so check www.helptobuy.org.uk and get more details about the Help to Buy: Equity Loan application process.

FREQUENTLY ASKED QUESTIONS

Who qualifies for Help to Buy?

To qualify for the home purchase plan,

  • You must be at least 18 years of age
  • At least 5 per cent of the property’s full purchase price is required as deposit
  • 25 per cent or more of the total purchase price must be taken out as a mortgage

Can you use the Help to Buy scheme on any property?

The Equity Loan of Help to Buy on any property is applicable for houses valued up to £600,000. There is no maximum income requirement, unlike other prior schemes; however, the property must be a newly built home and your sole residence.

Help to Buy isn’t applicable for buy-to-let properties.

How does the Help to Buy scheme work?

Help to Buy works by offering an equity loan wherein the government lends funds to current homeowners and first-time buyers for them to purchase a newly built home. The purchase price must be below £600,000. The scheme will lend buyers 20 per cent of the purchase price, or 40 per cent in London.

For a Help to Buy ISA, the property value can be up to £250,000 or £450,000 in London.

How much deposit do I need for the Help to Buy scheme?

The Help to Buy’s Equity Loan is a purchasing plan for houses wherein the government lends up to 20 per cent of the cost of your newly built home. When participating in this scheme, you’ll only need a 5 per cent cash deposit and a 75 per cent mortgage to make up for the rest.

Is there a salary limit for Help to Buy?

The government have announced changes in the Help to Buy Equity Loan scheme due to the concerns over increasing house prices. New loans under this scheme should be less than 4.5 times the borrower’s income.

What happens to Help to Buy after 2021?

There are no changes to the current Help to Buy loan scheme, and it will still run until March 2021. The government will lend first-time buyers up to 20 per cent of the house price, and 40 per cent for those residing in London.

What happens after five years of Help to Buy?

Borrowers must pay a yearly fee that is equivalent to 1.75 per cent of the loan value. This rate increases annually in line with the RPI plus 1 per cent, until the loan is paid off, often through remortgaging.

Is there a salary limit for Help to Buy?

An updated salary limit is set for Help to Buy mortgages. The government announced this change to the Help to Buy mortgage guarantee scheme amidst concerns over rising house prices. Now, the new loans must be less than 4.5 times the borrower’s annual income.

Is a Help to Buy loan worth it?

No-interest payments on the lending for the first five years is a huge benefit to new buyers. Additionally, only the best mortgage deals can beat the 1.75 per cent rate of your home purchase assistance that is payable from the fifth year.

Why would Help to Buy be declined?

Some of the reasons why your Help to Buy Equity Loan could be declined are:

  • If you have overdue payments on outstanding loan balances.
  • County Court Judgments (CCJ) file for more than £500 on your credit file.
  • You have a bankruptcy order on your credit file in the last three years.

Can I still get Help to Buy?

Yes, the lending plan for housing purchases by the government, through Help to Buy, is available until 2020. First-time buyers and homeowners who are looking to move can get this loan, but it is only available for newly built properties.

Do you have to pay back Help To Buy?

As a borrower, you have the option to pay back the equity loan at any time without penalty. This equity loan provided by Help to Buy is only applicable to properties that are worth a maximum of £600,000.

How Help to Buy Schemes Work

Help to Buy schemes offer an equity loan as assistance in purchasing a home for first-time buyers and current homeowners. They are lent money by the government to purchase a newly built house worth up to £600,000.

You may borrow 20 per cent of the purchase price without incurring any interest for the first five years, provided that you have a 5 per cent deposit at the minimum. Also, you can borrow up to 40 per cent of the purchase price if you are residing in London.

According to the government, it will extend its Help to Buy equity loan scheme up to 2023. However, after March 2021, the programme will be restricted to first-time buyers of newly built homes only.

Starting in 2021, new regional price caps which may reduce the ceiling value of properties bought through the Equity Loan Scheme will also be put in place.

Help to Buy Scheme Explained

Under the Help to Buy scheme, properties can be purchased by first-time buyers and existing homeowners provided they are newly built homes. With the buyer placing a minimum deposit of 5 per cent of the property value.

The government then covers 20 per cent of the amount through the Homes and Communities Agency (HCA). This gives the buyer a 25 per cent combined deposit, allowing them to access more attractive mortgage rates from lenders who are participants of this scheme.

The 20 per cent provided by the government is cost-effective as it is interest-free within the first five years and only starts charging a 1.75 per cent interest rate in the sixth year, with an additional 1 per cent plus inflation (as dictated by the Retail Prices Index) annually after that.

Get Expert Help To Buy Mortgage Advice

All firms are regulated by the Solicitors Regulation Authority or the Council for Licensed Help To Buy

Buying A Home: How Help To Buy Schemes Can Help?

If you’re having a hard time buying a home, there are various forms of help available for you to choose from. The government’s Help to Buy, find a property scheme, in particular, provides assistance in purchasing a new-build home. It works by providing an equity loan that’s up to 20 per cent of your home’s purchase price.

With only a 5 per cent deposit amount coming from your end, combined with the 20 per cent equity loan from the government, the chances of securing a cheaper mortgage deal while ensuring that the repayments remain affordable are significantly increased.

Equity Loans: Ways to Repay Help To Buy Schemes

You have three options to repay your loan either in parts or one lump sum.

  • Through remortgaging – one of the most popular options. You can either keep the equity loan separate as you remortgage your standard mortgage or you can remortgage to pay off either the entire equity loan or part of it.
  • By staying put and paying off the loan or interest – you may opt to stay put and start paying the interest, or save enough funds to pay off the equity loan, which is worth doing if you’re keen to secure full ownership of your property without incurring any interest charges.
  • By selling and moving somewhere else – as a last resort, you may opt to include your home in the list of Help to Buy properties for sale, especially if its price has already soared. By banking the profits after repaying your loan from the proceeds of the sale, you’ll avoid any interest on the equity loan.

If you need help to buy properties and want some expert advice get in touch with one of our professionals today!