If you’re a first time buyer currently considering your options for getting on the property market, one of the best things you can do is consider the Help To Buy Scheme. Launched by the Government in an attempt to make it that little bit easier for first time buyers to get onto the property ladder and home owners to move up it, it offers two main solutions in terms of financial assistance; the equity loan and the mortgage guarantee.
It’s a fantastic offering which has already helped hundreds of thousand to become home owners as well as those already on the ladder to move into a bigger home and allows this to happen with as little as a 5% deposit. In recent years, the days of 0% mortgages and even 5% mortgages seemed to have disappeared and, in some respects, they have, however Help To Buy makes it that little bit easier and offers the encouragement that the country needs to see a nation who once again buy rather than rent their home.
We caught up with David from Search Mortgage Solutions in London to take a look at just how the Help To Buy Scheme can help first time buyers get onto the property ladder!
The Equity Loan
The ‘equity loan’ sees the Government lend you up to 20% of the cost of your new-build home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. The key criteria here, however, is that it is a new-build you purchase and you won’t be eligible if you’re looking to buy a house which is already been lived in. This, to some extent, is a fantastic encouragement to fill the houses being built right across the country at the moment.
The fact that you’ll only need a 75% mortgage whilst only needing a 5% deposit means you’ll be able to get a more affordable mortgage, potentially on a more expensive house than you otherwise would have been able to, all without any repayments at all on the government’s 20% for 5 years. The only other criteria here is that you mustn’t own another house and that it’s of a value lower than £600k.
Mortgage Guarantee
In comparison, the mortgage guarantee 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. You’ll still only need a 5% deposit in most cases. You won’t, in theory, be given or lent money by the government towards your mortgage, however you’ll have the backing and a guarantee that the lender has purchased a guarantee on your mortgage.
At the end of the day, the Help To Buy Scheme offers a fantastic solution which, as far as we’re concerned, first time buyers and home movers alike should seriously consider making the most of whilst it’s still available!