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.
Who is eligible?
A mortgage under the Help to Buy: mortgage guarantee scheme works like any other mortgage. Your lender will check that you can afford the mortgage and that you do not have a history of payment difficulties.
To qualify for a mortgage supported by Help to Buy – mortgage guarantee:
- the property you are purchasing could be an existing or new-build home in the UK, priced up to £600,000
- you must not own any other property anywhere in the world at the time you buy your home supported by the Help to Buy: mortgage guarantee scheme
- your mortgage must be a repayment one, not interest only. Offset and guarantor mortgages are also excluded from the scheme
- you can’t let out the property to somebody else
- your mortgage can be taken out by an individual or individuals but not by a company
- you cannot use the mortgage guarantee scheme with any other Government scheme such as Help to Buy: equity loan or shared ownership. Your deposit for the property can’t come from a government scheme either
- you don’t have to pay any additional fee to Government to get a Help to Buy supported mortgage
- the size of the mortgage you apply for must be less than 4.5 times your income
- the Help to Buy (equity loan) scheme in England will also be extended to 2021, one year longer than planned
- an extension to the scheme in London will see buyers who can find a 5% deposit given a loan worth up to 40% of the property
- the loan will be interest free for five years
- elsewhere the existing maximum loan is for 20% of the property’s value.
- London Help to Buy scheme to offer interest-free loan worth up to 40% of the value of a newly built home
ISA Help to Buy
If you are a First-time buyer aged 16 or over, the Government will give you a cash boost towards buying your first home if you save into a new type of ISA. Under the new Help to Buy ISA scheme, you can save up to £200 every month and the government will add 25% on top (so £50 on £200). You can also start it off with an initial £1,000 which will have £250 added on top of it.
The minimum you need in to get the bonus is £1,600 (so a £400 bonus), and the maximum the Government will contribute is £3,000 (so that means you will have saved £12,000).
Bond Financial Limited are able to advise you on all the options available to you, making sure that you are aware of all the options available.