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Help To Buy Mortgages

Over the years there have been a number of government led schemes introduced to assist people purchasing a property. Whilst the Mortgage Guarantee scheme offered to assist those with smaller deposits was withdrawn in 2016, this doesn’t mean that purchasing a property with a 5% deposit is no longer an option.

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What is Help To Buy?

One option available to potential purchasers is the ‘Help To Buy’ scheme to give buyers a helping hand onto the rungs of the property ladder, on a property up to £600,000 in value. You can be either a first-time buyer or looking to scale up. It’s designed to assist people who have the income to make regular mortgage repayments, but whose deposit is not necessarily substantial enough to allow them to buy their own home conventionally.

Available on qualifying new build properties and administered by the locally appointed agent, the Help to Buy scheme provides an equity loan of up to 20% towards the purchase of the property. The benefit of this is that a smaller mortgage is often required and with the additional security that the lender has by way of the equity loan, a lower interest rate is often available which result in lower, more affordable monthly payments.

Checking Out Your Options

Just because the government stopped guaranteeing loans, it doesn’t mean that homebuyers with a 5% deposit are limited to using the Help to Buy scheme. There are many lenders who may be able to provide high loan-to-value mortgages, enabling first time buyers and those with a lower deposit to get on the housing ladder, without the restriction of only being able to purchase a qualifying new build property.

The Value of Good Advice

We can help you find your feet when it comes to Help To Buy schemes. There are many factors to consider such as your eligibility to to be accepted onto the scheme along with the ongoings costs and implications of taking the loan.  We will be happy to assist you with this to ensure you gain a full understanding of what the Help to Buy scheme entails.

The most valuable thing we can share with you is our expertise. If you have a big enough deposit without the help of this scheme, then it may make more financial sense to not use Help To Buy. We can only know from looking at all your circumstances.

What’s Next?

Your mortgage adviser will help to confirm your eligibility so that you feel confident to pay a reservation fee if required, taking into consideration the additional costs you will be liable for such as a mortgage deposit and other fees such as stamp duty. We can then assist you with the process of completing a property information form which will be sent to your local Help to Buy agent.

It is the agent’s job to assess whether you can afford the property and the mortgage based on the information provided. If this stage of the process is successful, you will then be sent an ‘authority to proceed pack’, which you will need to complete your mortgage application.

Help To Buy Mortgage Calculator

See How Much You Can Borrow

Use our help to buy mortgage calculator to see how much you could borrow against your next home.

Check Your Eligibility

Let’s Get Started

With intricate knowledge of the Help to Buy mortgage market, we know where to turn to find the best deal at any given time. The best rates are not always on the high street. We research the market on an ‘unlimited’ basis, including high street lenders and specialist Help to Buy mortgage providers, to find the right deal for you.

Speak to an Experienced Adviser

Get in touch with your local Mortgage Centres office and speak to one of our experienced advisers. They will be more than happy to go over all of the above and more. A Help To Buy mortgage doesn’t have to be complicated. Let us do the hard work for you.

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Helpful Quick Guides

What is a government-backed equity loan?

A Help to Buy equity loan is a loan from the government of up to 20 percent of the cost of a new-build property. Equity loans are open to first-time buyers and home movers, but the property must be a new-build.

To qualify for an equity loan, you will have to contribute at least 5 percent of the purchase price as a deposit. You will then receive a loan from the government of up to 20 percent of the purchase price, meaning you’ll need a 75 percent loan-to-value mortgage to cover the rest.

There is no interest charged on the government loan for the first five years of property ownership. In the sixth year, you’ll be charged interest of 1.75 percent of the loan’s value. After this period, the fee will increase every year by the Retail Prices Index (RPI) plus 1 percent.

The loan must be paid back within 25 years, or when the property is sold, whichever comes first. However, it’s worth bearing in mind that if you sell the property, you will have to pay back 20 percent of the sales price, which could be more than originally borrowed if the property’s value has increased.

How can I access help to buy?

At The Mortgage Centres, we’re scanning the market daily for new mortgage products and better deals. So, if you are looking for an option that enables you to make the most of your deposit and get started owning your own home, then we can help.

How do I apply for a help to buy mortgage?

Applying for the Help to Buy scheme is easy. If you’re applying for the equity loan, you must buy your home from a registered Help to Buy builder, and although the majority of developers are included in the scheme, some are not. Contacting your local Help to Buy agent can help you find a Help to Buy registered builder in your area.

Once you have found an eligible property, you should then speak to a mortgage broker who can organise a mortgage ‘decision in principle’ from a participating lender on your behalf.

How much will a help to buy mortgage cost?

There are a number of Help to Buy lenders out there, so prices will differ. However, as a guide, interest charges tend to range from 3 to 4 percent. There are also likely to be a number of charges attached to each deal, so it’s essential you take these into account before making a decision based purely on the headline rate. If you are signing up for the equity loan part of the scheme, you should also budget for the loan repayments you’ll have to make after year five.

What should I watch out for?

In common with any mortgage borrowing, the main risk is that of rising interest rates. In addition, borrowers who apply for a 95% mortgage will have minimal equity initially and will be exposed to a negative equity position in the event of property prices falling. In other words, your house may be worth less than the value of your mortgage when you need to sell it.

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