Help to Buy Scheme Guide

Support from the government backed Help to Buy initiative is available for first time buyers and to existing homeowners who are finding it difficult to move further up the housing ladder.

If you are looking to make the dream of owning your own home a reality, or if you are looking to move from your existing property but are struggling to save enough for a deposit, Help To Buy could make this happen with as little as a 5% deposit.

Who is Help to Buy for?

If you feel a mortgage is affordable but are struggling to save a deposit, Help to Buy can speed up the process of saving and make you a more attractive proposition, safer option for mortgage providers to lend money to.

Eligibility

  • Saved a deposit of at least 5%
  • Be looking to buy a home worth £600,000 or less, a limit applies to Help to buy ISA of £450,000.
  • Be purchasing a property that you intend to live in most of the time. (you can’t use this scheme to buy a 2nd home or buy to let).

What Help to Buy schemes are available?

There are three main Help to Buy options, the Help to Buy Equity loan, Help to Buy Lon-don and Help to Buy ISA. Below we explain the various schemes and look at who they are for and the eligibility requirements are:

Help to Buy Equity Loan

Who is eligible: First time buyers and home mover with a minimum of 5% deposit

Property price: £600,000 or less in England and £300,000 in Wales.
Property type: New build

How it works:

Help to Buy lends you 20% of the property value as a deposit on newly build properties. As a minimum the you would need to put in a 5% deposit, you would then obtain a mortgage for 75% of the property Value.

The Help to Buy Loan will be interest free for the first 5 years, on the 6th year you will start to pay interest on the 20% equity loan from the Help to Buy. You can repay the loan in full at any time, but the loan must be paid in full after 25 years.

A good way to view this, Help to Buy have a 20% investment in the property you own, should you sell this property in 10 years’ time, and the property has increased in value, you would owe Help To Buy 20% of the properties new current value.

How to apply?

You will need to purchase a property through a registered Help to Buy developer. You will need to apply to help to buy and a mortgage lender for funding, we are experts and shall help complete all the necessary paperwork for these applications.

Help to Buy Loan London

Who is eligible: First time buyers and home mover with a minimum of 5% deposit looking to buy a property in a London Borough

Property price: £600,000

Property type: New build

Help to Buy lends you 40% of the property value as a deposit on newly build properties. As a minimum the you would need to put in a 5% deposit, you would then obtain a mort-gage for 55% of the property Value.

The Help to Buy Loan will be interest free for the first 5 years, on the 6th year you will start to pay interest on the 20% equity loan from Help to Buy. You can repay the loan in full at any time but the loan must be paid in full after 25 years.

A good way to view this, Help to Buy have a 40% investment in the property you own, should you sell this property in 10 years’ time, and the property has increased in value, you would owe Help To Buy 40% of the properties new current value.

How to apply? You will need to purchase a property through a registered Help to Buy developer. You will need to apply to help to buy London and a mortgage lender for funding, we are experts and shall help complete all the necessary paperwork for these applications.

Help to Buy ISA

If you are saving to buy your first home, save money into a Help to Buy: ISA and the Government will boost your savings by 25%. So, for every £200 you save, receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Step 1. Open the Help to Buy: ISA. They are available from a range of banks, building societies and credit unions.
The accounts are available to each first time buyer, not each household. This means that if you are planning to buy with your partner, for example, you could receive a government bonus of up to £6,000 towards your first home.

Step 2. Save up to £200 a month into your Help to Buy: ISA. To kick start your account, in your first month, you can deposit a lump sum of up to £1,200.

The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy: ISA before you can claim your bonus. The maximum government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.

Step 3. Receive your bonus when you are close to buying your first home, you will need to instruct your solicitor or conveyancer to apply for your government bonus. Once they receive the government bonus, it will be added to the money you are putting towards your first home. The bonus must be included with the funds consolidated at the completion of the property transaction.

The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

To qualify for a Help to Buy: ISA you must:

  • Be 16 or over
  • Have a valid National Insurance number
  • Be a UK resident
  • Be a First Time Buyer, and not own a property anywhere in the world
  • Not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps.

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