Looking for a help to buy mortgage? We can help you with the whole process if you aren’t too sure what to do. The current help to buy scheme is currently running from March 2021 to the 31st of March 2023. If you are yet to apply for a help to buy scheme this page will explain all you need to know about it. The help to buy scheme works by providing those who qualify with an equity loan towards the cost of buying a property. The loan works by allowing you to borrow money using your home as collateral.
With the scheme you can borrow up to 20% of the total cost of the property, increasing to 40% for those in the London areas. For the first five years on the scheme, the loan is interest-free and all you have to do is pay a £1 a month management fee alongside your mortgage. In the 6th year, you will start to pay the interest on the loan at a monthly fee of 1.75%. The interest will increase each year in line with the consumer price index. When you pay off the loan it must be paid in full. The repayment must happen at the end of the equity loan term or when you pay off the mortgage. If you sell your home or if you don’t follow the agreed terms you may be asked to pay the loan back sooner.
If the property increases in value and you got to sell it before you’ve paid the loan off, you’ll repay the amount you borrowed at the current market rate, rather than the rate at the time you took out the loan. This means that if you borrowed 20% on a £100,000 property (£20,000) and the property doubles in value over time so that it’s worth £200,000 now you will have to pay £40,000 as that would be the 20% of the property. We think that it is a good idea to try and pay off the equity loan as quickly as possible to avoid having to pay more in the future if your property increases in value. It is worth considering all of the financial implications at the time you take out the loan, as well as keeping an eye on your credit score.
The requirements of the help to buy scheme is that the buyers must be at least 18 years old and the home must be a new build and purchased from a registered help to buy home builder. With this scheme, there is also price caps based on where you are buying. In the South East, you can get a property valued at £437,600 and in the South West, you can get a property valued at £349,000 with the scheme. All you have to do to get yourself on this scheme is raise at least 5% of the property value you are going to be purchasing. This could be as little as £5,000 depending not the property you are prucashing.
If you require more information please make sure you get in contact with our team. We can help you decide the best property for you and make sure all the finances are sensible and feasible for your current situation.