Help To Buy – Avoid The Confusion

We get a lot of questions about Help To Buy II.
That’s right there are two schemes (accept in Wales) and a lot of confusion surrounds them. The Equity Loan(I) and The Mortgage Guarantee (II)

The most popular and the one that receives the most press is the Mortgage Guarantee Scheme (II)

• The Help To Buy Mortgage Guarantee Scheme can help you move home with as little as a 5% deposit.
• It’s available to ALL types of buyers, first time buyers and homemovers
• It’s available on new build AND existing homes
• It applies to properties up to the value of £600,000
• You cannot use it to purchase a second home or buy to let.
• You cannot have a second home or buy to let in the UK or abroad.
• You must have a good credit score. Most Help To Buy Mortgage lenders will decline poor credit rating or recent adverse credit and a mortgage broker can’t help you.
• The Government gives the lender a 15% mortgage guarantee of the loan value.
• The Guarantee scheme will end in 2017 but lasts for 7 years
• The loan must be repayment NOT interest only mortgage
• The lender must pay the government for the guarantee so expect the rates available to be higher.
• The government takes no equity stake – You do not have to pay the government when you sell.

The Equity Loan Scheme (I)

• Available for New Build Properties Only
• It applies to properties up to the value of £600,000 (£400,000 in Scotland and is not available in Wales)
• Its available to First Time Buyers and Homemovers but cannot be used in conjunction with part exchange
• Only a 5% deposit is required
• You cannot use it to purchase a second home or buy to let.
• You cannot have a second home or buy to let in the UK or abroad.
• You must have a good credit score. Most Help To Buy Mortgage lenders will decline poor credit rating or recent adverse credit and a mortgage broker can’t help you.
• The government will provide up to a 20% stake of the Purchase Price Interest Free
• The Equity Loan scheme will end in 2017
• The loan must be repayment NOT interest only mortgage
• You can pay off the Government at any time in part or in full but you must pay it off if you sell your home.
• If the value of your home increases in the time that you wish to sell it, so does the value of the stake that you must repay to the government.

There is a lot to take in and the options can seem confusing.

Not all lenders and banks have signed up to the Help To Buy Mortgage schemes so speak to an independent whole of market mortgage broker to get the best mortgage for you.