What is a Help to Buy mortgage?
The Help to Buy equity loan scheme is a government loan offering first time buyers and existing home owners the opportunity to purchase a newly-built flat or house with as little as a 5% deposit contribution.
How does a Help to Buy mortgage work?
To secure a mortgage under this scheme, you’ll need to contribute at least 5% of your own money. The rest of the deposit is made up of a loan from the government. You can borrow 20% of the purchase price interest-free for the first five years, or 40% under the London Help to Buy scheme.
What is the Help to Buy criteria?
If you’re considering getting a mortgage through the scheme, there are some points that you should consider.
- A Help to Buy mortgage is interest free for the first five years. After that, you will begin to pay interest but only on the original loan amount.
- If you intend to use the scheme, you can only take out a repayment mortgage.
- It’s not available to people purchasing the property as a second home or as a property which you intend to rent out.
- You cannot exceed the maximum property values as stated above.
- The loan must be repaid when the mortgage term ends or you decide to sell the house, whichever comes first.
If I don’t live in England but reside in the UK can I still get a Help to Buy mortgage?
Yes, these mortgages are available across the UK but the criteria are different.
Help to Buy in Scotland
Help to Buy in Scotland is made up of two schemes; the smaller developer new build scheme, designed for smaller property builds, and the affordable new build scheme available for larger properties. However, in both instances the property must not cost more than £200,000.
Similarly to England, you must contribute 5% deposit to the loan. The Government will then lend 15% of the property’s value.
Help to Buy in Wales
The maximum equity loan available on new-build properties in Wales is 20%. A 5% deposit is required, and the property must not cost more than £300,000.
Help to Buy in Northern Ireland
There is currently no Help to Buy equity loan scheme available in Northern Ireland.
The scheme is not available for international properties.
For active servicemen and women, it allows personnel to borrow up to 50% of their salary interest-free to use as a deposit.
The maximum loan amount available in the scheme is £25,000 and must be repaid over 10 years.
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