.jpg)
Broker Mortgages
What Is Help to Buy?
Help to Buy is a government initiative aimed at helping hard-working people like you secure your first or next dream home. First Time Buyers have access to the Equity Loan scheme and the Shared Ownership scheme is open to people moving home or those that have owned a property previously. The Equity Loan scheme is for new build properties only, but Shared Ownership could be on a new or second-hand property. To explore the schemes in more detail, please call 0330 133 2981.
Equity Loan: 2021 - 23
The equity loan scheme is aimed at first time buyers looking to buy a new-build home. You provide a minimum of 5% deposit – the government provides a loan (equity loan) of up to 40% for London properties or 20% outside London (the limit is 15% in Scotland). You then borrow the rest as a mortgage from one of the many mortgage providers we have access to. The government loan means you need to borrow less as a mortgage, so you could secure a first home that was previously out of reach. You do need to pay the loan back of course and a financial advisor will explain when and how.
Shared Ownership
If you can’t quite afford the mortgage on 100% of a home, Help to Buy: Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. As you build up equity, save more money or your income increases, you can buy additional shares in your home. Most housing associations will allow you to increase your share until you own 100%.
Shared Ownership allows you to buy a newly built home or an existing one through resale programmes from housing associations. You’ll need a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership properties are always leasehold.
Shared Ownership
Eligibility criteria
Your household earns £80,000 a year or less outside London, or your household earns £90,000 a year or less in London
You are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.
You must pass the Homes England affordability check. We can assist you with this.
Repaying Your Equity Loan
Your government equity loan is interest free for the first five years, but you will pay a £1 management fee every month by direct debit. Your Help to Buy Administrator will help to set this up. From year six, you will pay interest on the loan at a rate of 1.75%, rising annually by CPI inflation plus 2%. The equity loan can be repaid at any time within the term of the mortgage. This can be done via savings, raising capital against the property (re-mortgaging) or on sale of the property. At this point the property will be revalued and you will repay 20% of the value of the property at this time. Therefore you could repay more than you initially borrowed, but you could pay less if the property value falls.
Think carefully before securing other debts against your property. Your home may be repossessed if you do not keep up repayments on your mortgage.
Some buy to let mortgages are not regulated by the financial conduct authority.