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Thanks to the brand new Government-backed equity scheme 'Help to Buy’, you could buy a new home with a 5% deposit plus a 20% equity loan from the Government.

More Help to Buy
Help to Buy is the brand new Government-backed scheme, launched in the recent budget. Those looking to buy a new home (whether first time buyers or existing home owners) only need a 5% deposit to buy a new home within England, up to £600,000 in value, and qualify for some of the best mortgage interest rates available.

Here’s how it works:

Worked example based on a £120,000 purchase price:

You arrange mortgage                            (75%)    £90,000
Deposit                                                   (5%)    £6,000
Government equity loan                          (20%)   £24,000

Total Purchase Price:                                    £120,000

What is Help to Buy?
Help to Buy is made up to two distinct schemes – the “equity loan” and “mortgage guarantee”.

When does the scheme start?
The equity loan element of Help to Buy came into operation on 1 April 2013.

How does it work?
Buyers will be provided with an equity loan from the Government of up to 20% of the value of the property. This will be interest free for the first five years.

What happens after the five years?
After this period, a fee of 1.75% is payable on the equity loan, this will rise by RPI inflation plus 1%.

When will I have to pay back the loan?
The loan can be repaid at any time within the first 25 years (or the terms of mortgage), or alternatively on the sale of the property.

Why has Help to Buy been set up?
The Government is continuing its pledge to help more people across the country become homeowners. It is also concerned with increasing the supply of low-deposit mortgages and new housing.

Am I able to buy a house under the new scheme?
If you can raise a 5% deposit you will be able to buy a new home under Help to Buy.

What is the maximum property purchase price?
The maximum home purchase price is £600,000.

Is the scheme just for first-time buyers?
Help to Buy is available for both first-time buyers and existing homeowners.

Can I use Help to Buy for a buy-to-let property?
The scheme is only available on properties that will be occupied by the person or persons who have taken out the mortgage.

Am I able to get an interest only mortgage using Help to Buy?
The scheme is only available in relation to capital repayment mortgages.

Why does the required customer deposit percentage vary?
Each lender has its own lending criteria and may accept different deposit levels and will charge different interest rates.  Please contact us and we will help to work out the best option for you.

There are a variety of finance options for new build houses. For instance, shared equity could be a possibility. In this instance, the developer shares in the appreciation of the value in the property. Shared ownership with a local authority or developer may also be an option. If the property is suitable security for a mortgage, then lenders may be interested, particularly if the developers are offering discounts. However, not all lenders will accept a builder’s deposit.

In addition, the New Build HomeBuy scheme offers new homes for sale on a part buy/part rent basis. Homes are available through housing associations and you buy between 25-75% of the property value using a mortgage and any deposit you have.  Then you pay a subsidised rent on the remainder.

With new-build it is also worth remembering completion deadlines. If your home is unfinished and looks like it may run over the deadline, bear in mind that most lenders’ offers will only last for a six-month period. Some lenders offer specific loans for people looking to buy new build properties, some of which extend the mortgage offer from six months to 12 months.

For a free UK new build mortgage quote, request a call back or fill in our quick enquiry form.

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