Help To Buy Scheme

If you’re looking to buy your dream home in the Wolverhampton, Birmingham or Walsall area, the government are now making it a little easier to get a foot on the ladder or upgrade your existing property.

The Help to Buy scheme makes it possible to buy a new build or pre-owned home up to the value of £600,000 with as little as a 5% deposit, perfect for those who can afford the repayments of a mortgage but might not have that bulk of money stored away for a deposit.

There are two options available for potential home owners:
Mortgage Guarantee – As of October 2013, this makes it possible to buy a new or pre-owned property with a standard mortgage of up to 95% of the purchase price.
Equity Loan – This is a government equity loan that is available on new build properties only. The loan will cover 20% of the purchase price, plus a traditional mortgage. This is also available with a 5% deposit.
So how do these schemes work? Let’s take a closer look.

Mortgage Guarantee
In October 2013, this scheme was extended, making it possible to get a mortgage with a 5% deposit when looking to buy any new build or pre-owned home up to the value of £600,000. This scheme has been promoted to first time buyers, but you could also be eligible if you are looking to move up the property ladder too.

What do I need to do?
Applying for a mortgage with a 5% deposit isn’t any different from applying for a standard mortgage for the buyer. In this scheme, the government will guarantee the repayment of the mortgage to the lender, but this is done behind the scenes and the buyer won’t notice any difference when applying for a mortgage.
To be eligible for the mortgage guarantee scheme, you need to have the following:

  • Minimum 5% deposit
  • Available to both first time buyers and existing home owners
  • Maximum property value of £600,000
  • Must be your only property
  • Only available for properties in the UK

Not all lenders will offer the mortgage guarantee scheme, so this offer will only be available from participating lenders. You can speak to us, search online or speak to an Independent Financial Advisor to find the right deal for you.

Equity Loan
The equity loan scheme is available for new build properties only. The government will loan you 20% of the value of the property, meaning the buyer needs a 5% deposit and a mortgage for 75% of the property.

What do I need to do?
Buyers will take out a mortgage as normal, but the equity loan will need to be paid off if you wish to sell the property or at the end of the mortgage period. As this is an equity loan of 20%, the size of this payment may increase if the value of the property goes up over time.
To be eligible, you need to meet the following criteria:

  • Available on properties up to the value of £600,000
  • Only available for new build properties
  • You must repay the 20% equity loan at the completion of the mortgage or if you sell the property, whichever comes first
  • You need at least a 5% deposit
  • It must be your only property
  • Available to both first time buyers and existing home owners

You won’t be charged fees on the 20% equity loan for the first 5 years of owning the property. After this period you will be charged a fee of 1.75% of the value of the property, increasing every year by the retail price index plus 1%.

You can talk to us for more information on the help to buy scheme, or seek the advice of an Independent Financial Advisor.