Help to Buy Mortgages
The Government has introduced “incentive schemes” such as the Help to Buy Equity loan, which is only applicable for new build properties. This is available for first-time buyers and movers.
The Government will provide a 20% (40% in London) Help to Buy Equity Loan which doesn’t require any repayment in the first 5 years. You will still need a 5% deposit but your mortgage will be for 75% of the value of the property once the 20% Government Equity Loan is received. This means that you can secure competitive rates of interest usually only on offer to those with a 25% deposit.
After the first five years you have the option to staircase (purchase) part or all of the Equity Loan. If you don’t wish to do so, then interest will be charged on the outstanding balance of the equity loan: this is in addition to your mortgage repayment. This interest rate that is initially charged in year 6 is 1.75% and will increase each year by RPI ( Retail Price Index) plus 1%.
If you would like to learn more about how the repayment of the equity loan works please take a look at this video https://www.helptobuymidlands.co.uk/charges-and-repaying-your-equity-loan
We have worked with numerous clients on this scheme and go beyond what most advisers will do. We complete all the paperwork to submit to the Help to Buy agency, who have to approve that the borrower/s meet the criteria. We will liaise with the builders and obviously the mortgage lenders to ensure that the transaction is as smooth as possible.
Please note that the Help to Buy Government loan is only available for property purchases of up to £600,000.
Help to Buy ISA
The Government now provides an incentive to motivate new borrowers to save. The Government Help to Buy Individual Savings Account (ISA), was introduced in Autumn 2015 to help First Time Buyers not only save for a deposit, but also reward them for doing so.
The Help to Buy ISA operates in much the same way with the same tax free benefits as existing ISA’s but when the funds are drawn to put down as the deposit on your very first UK property, the Government provides a 25% bonus of up to maximum of £3,000, based upon the savings made – subject to a minimum savings balance of £1,600. This Bonus payment is paid directly to the solicitors handling your purchase transaction. An initial £1,000 contribution can be made when the account is opened and a maximum £200 per month thereafter. As these ISA’s are in individual names, couples looking to save for their first house can open a Help to Buy ISA each, and are therefore both entitled to the Government bonus payment when they buy their first home together.
This scheme for the opening of new Help to Buy ISA’s is only intended to run for 4 years from when they were announced by the government, although there is no limit as to how long the account can remain open, so time is already ticking for those first time buyers looking to take advantage of this incentive.
Looking for something else?
First Time Buyer Mortgage
This is a big and exciting step for anyone going down the house purchasing route for the first time. This is likely to be one of the biggest financial commitments that you are likely to make and it has to be right for you.
Home Mover Mortgage
If you are looking to move home and want to see how much you can borrow, together with the associated costs of moving, then look no further.
It is vital that you protect that investment you will be working hard to maintain in the years ahead. As no one can predict the future, we would recommend that you consider protection that will help secure your investment.