The government sets up a backup initiative to help and support first time home buyers and those people who want to move up into property ladder. This support is through help to buy which carries little down payment of 5%. Help to buy equity loan was a kind of policy formulated by the Government included in their budget and started in March, 2013. However, the help to buy mortgage will be available in the year 2014. The help to buy is composed of two phases.
First phase – exclusive for new homes only
People with 5% down payment can borrow cash up to 20% from the value of a home in the form of a loan from the Government. The loan has no interest for the first 5 years. The remaining loan is funded by a mortgage through participating lenders like Halifax, NatWest, and Woolwich. They mostly offer help to buy mortgages and allow access to the standard product range.
Borrowers can enjoy the lowest down payment of 5% since most home down payment today ranges between 25% and this sucks first time home buyers. If the loan has not yet been repaid over five years, this will start to earn interest starting 1.75% and will rise by 1% every year plus the inflation. If the inflation stays at 2%, the rate of the mortgage next year will become 1.8%.
Second phase – compose of new and existing homes
The borrowers need at least 5% deposit; meanwhile the lender is capable to purchase a guarantee from the government that covers 15% of the property value. The help to buy project is available to people such as first time buyers and home movers. There is no income limit. However, the property value must be more than £600,000. If you use this kind of scheme, you cannot sub-let your home.
How does help to buy equity loan works?
• The help to buy equity loan works through a contribution of 5% deposit of the property price.
• The government will provide a loan up to twenty percent of the price.
• To cover the remaining loan, you must need a mortgage of 75%.
Who are qualified for help to buy equity loan?
• First time home buyers
• Home movers
• Have at least a deposit of five percent of the entire purchase price
• Eligible to get a mortgage from the commercial lender
• New built homes
• Properties below £600,000
• Available in England only
What is help to buy mortgage?
This guarantees and lets you purchase a new home or perhaps an existing home with 5% deposit of the purchase price.
Who are qualified for the help to buy mortgage?
In order to qualify, your newly built home must be:
• priced around £600,000 or perhaps less
• your primary home
• legally owned by you
• a citizen on United Kingdom
• somebody with a plan to stay permanently in UK
In buy to help mortgage, you don’t need to be a first time home buyer and the income level has no limit. However, you cannot use this with any other
You don't have to be a first-time buyer and there's no limit on your level of income. But you can't use help to buy with any other common financed mortgage scheme.