Help to Buy Mortgage Guarantee scheme launched – how could you benefit?

Help to Buy is a new government backed initiative to help individuals looking to move or re-mortgage, or first time buyers with as little as a 5% deposit. The maximum purchase price of the property is £600,000.

Help to Buy is made up of two schemes which are scheduled to run for 3 years, although the Government may decide to alter the terms of Help to Buy, depending on the take up of the funds available and the effect the initiative has on the UK housing market.

1. Equity Loan – available on New Build properties only. This scheme has been available since April 1st 2013 and has already resulted in more than 15,000 properties being purchased under the scheme.

2. Mortgage Guarantee –available on ‘second-hand’ and New Build properties – launched 3 months earlier than the original date of January 2014.

If you are a home owner wishing to buy a larger home for your family or have children aged over 18 years old who you could help to buy their first home with the government’s assistance, then read on for more details.

Who fits the scheme?

  • Existing home owners and first time buyers
  • Buyers with a minimum deposit of 5% of the purchase price or equity in their current property of at least 5%
  • Buyers who are borrowing from a participating lender
  • Not available for Buy to Let or second homes

How does the Help to Buy Equity Loan (for New Build properties) work?

  • Available in England on New Build properties up to £600,000
  • Deposit of at least 5%
  • The government will give you an equity loan for up to 20%, interest free for five years Interest is payable on the government loan on any balance left after 5 years
  • Mortgage from a bank or building society of 75% to cover the rest
  • The government is entitled to its money back, plus a share of any profit you make by selling the house in the future, equal to the percentage contribution it made to help you buy it in the first place.

How does the Help to Buy Mortgage Guarantee (for all properties) work?

  • Available across the UK on New Build and ‘second-hand’ properties up to £600,000
  • Customer needs a deposit or equity of at least 5%
  • Lenders can buy a guarantee from the government on mortgages where a borrower has a deposit of between 5% and 20%, encouraging then to offer high loan to value mortgages up to 95% loan to value ratio (LTV)
  • The mortgages lent using the Help to Buy scheme will still be subject to usual underwriting criteria (affordability, proof of income, good credit record, etc.)

What should you do?

Are you a First Time Buyer who can afford mortgage payments but can’t afford a deposit of more than 5%? Now could be a great time to get on the property ladder and own your first home.

Do you already own a home but feel ‘stuck’ because the value of your home has not increased and so you can afford only a 5% deposit on your next place? This is a great opportunity for you too.

Or are you an existing homeowner and want to see if you can bring down your monthly repayments by remortgaging to a Help to Buy-backed mortgage?

Contact us today to see how Help to Buy could help you.

Your home may be repossessed if you do not keep up repayments on your mortgage.