There’s been lots of talk about the government’s Help to Buy scheme recently. But do you know what it’s all about?
Here’s the Marwood beginner’s guide…
What is Help to Buy?
Help to Buy is a government scheme aimed at reducing the amount of deposit buyers have to save to get on the housing ladder.
Homeowners can purchase a property up to the value of £600,000. According to estimates, there are around 665,000 homes on the market that qualify, with an average asking price of £225,000.
In six out of ten regions of England and Wales, deposits could be as low as £10,000.
How does it work?
Under the first phase of the scheme, only available on new build properties, the government loans you up to 20 per cent of the cost of a new-build home, so you only need a 5 per cent deposit and a 75 per cent mortgage to make up the rest.
This started in April and is aimed at encouraging house building.
The second phase, Mortgage Guarantee, is for current homeowners and first-time buyers who want to purchase a home with as little as 5 per cent deposit.
The buyer applies for a standard 95 per cent mortgage and doesn’t have to deal with any additional paperwork.
The government will provide a seven-year guarantee covering 15 per cent of the loan in case the borrower can’t pay the bills.
This stage is expected to continue for three years.
Am I eligible for Help to Buy?
You are eligible for Help to Buy:
- If the house sells for £600,000 or less
- If it’s not be a shared ownership or shared equity purchase
- If it’s not a second home
- If you don’t want to rent the property out
- The property can be newly built or already existing.
- You don’t have to be a first-time buyer and there’s no limit on your level of income.
- You can’t use Help to Buy with any other publicly funded mortgage scheme, or an interest-only mortgage.
How do I apply?
Check you meet the criteria; you have a deposit, and apply for a mortgage from an approved lender.
So far, RBS and Lloyds Banking Group have signed up and Virgin Money and Aldermore have announced that they will be involved as well, from January.
How do I know if it’s right for me?
Affording the deposit is just one step in house buying.
Think about fees, valuations, stamp duty, legal fees and identifying the best mortgage for your situation. Try not to rush into joining the Help to Buy frenzy – you may be able to afford a mortgage with a better rate that isn’t in the scheme.
Remember, the basic principles of buying a house still apply, the main thing being – can you afford it?