The help to buy scheme came into effect in April 2013 by the government to allow people to purchase a home, even if they cannot afford to pay a large deposit up front. The scheme was essentially created to boost the housing market and to give many first time buyers a helping hand with stepping onto the property ladder.
There are two options when purchasing a home through the help-to-buy scheme;
This helps buyers secure a 20% equity loan to help fund their purchase, as long as they come up with at least 5% of the deposit, meaning they will apply for 75% mortgage. The loan will be charge-free for the first five years and in the sixth year, a charge will then apply, increasing each year.
Mortgage Lender Guarantee
Typically, mortgage lenders will only lend a maximum of 80% of the property value. Here however, the mortgage lender will get an insurance guarantee from the government which covers any amount exceeding this, allowing them to lend up to 95%. To make sure you are getting a good deal, it is important to seek independent advice from a mortgage advisor since all lenders will price their mortgages individually.
With a small deposit required, buyers can have more funds available to assist with other costs involved in buying a home. The scheme is available throughout the UK and not only just for first time buyers, but for anyone wishing to purchase a home. With many lenders joining the scheme, this means there is a greater choice available for mortgage options.
To be eligible for the scheme buyers must;
- Have at least 5% deposit
- Be looking to purchase a home for £600,000 or less
- Use the property for their occupation and no other purpose.
- Not own any other property at the same time.
- Pass mortgage lenders basic criteria (income checks etc)
- Apply for a repayment mortgage
- Able to pay their own legal fees for completing the purchase
With a help to buy purchase, the conveyancing can be slightly more complex and it will require an experienced solicitor to deal with this on your behalf. We will be glad to assist you with any questions you may have about the scheme and make sure we adhere to any specific terms and conditions listed in your mortgage or loan agreement.
Contact us now on 0161 249 5087 and ask to speak to a member of our conveyancing department.