The Government has created the Help to Buy scheme to help hard-working people like you take steps to buy your own home. Whether you want to get onto the housing ladder or move up it, Help to Buy makes it possible to buy a new-build or existing home priced up to £600,000 with as little as a 5% deposit.
Equity Loan:How does it work?
With a Help to Buy: equity loan the Government lends you up to 20% of the cost of your new-build home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
You won’t be charged loan fees on the 20% loan for the first five years of owning your home.
Example: for a home with a £200,000 price tag
If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.
Mortgage Guarantee:How does it work?
A mortgage supported by the Help to Buy: mortgage guarantee scheme works in exactly the same way as any other mortgage except that under the scheme the Government offers lenders the option to purchase a guarantee on mortgage loans.
Because of this support, lenders taking part are able to offer home buyers more high-loan-to-value mortgages (80-95%).
You will still be fully responsible for your mortgage repayments. So if you have a 5% deposit, you will need to take out and pay back a 95% mortgage.
Example: for a home with a £200,000 price tag
Other housing options
These are other Government schemes to help you become a home owner:
- Shared ownership (part buy/part rent). This includes options for older people (OPSO) and for people with long term disabilities (HOLD)
- Right to Buy
- NewBuy
There could be other schemes, for example home ownership schemes supported by your local authority.
Contact your local Help to Buy agent for more information.
Content souced from: http://www.helptobuy.org.uk/home