How does Help to Buy work?
There are various schemes available for Help to Buy, this article is about mortgages for the Help to Buy Equity scheme, Forces Help to Buy and London Help to Buy.
In a standard Help to Buy Equity Loan, the Government lends you up to 20% of the cost of your newly built home. So, you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
In London, the Government is now increasing the equity loan from 20% to 40% to reflect the higher cost of buying a home.
You won’t be charged loan fees on the loan for the first five years of owning your home. (Source and more information: Help To Buy Government Website)
What happens when I want to sell the property?
Taking our property example in the illustration above, if the property goes up in value and sells for £210,000, you would get back £168,000 after paying back the original £40,000 government loan (20%) plus an extra £2,000 as the property has increased in value.
Your final mortgage balance (plus any fees) will also need to be repaid upon completion of the sale and deducted from the £168,000 received.
There is a full Help to Buy buyers guide available: Download the Help to Buy guide. This government guide includes advice on fees and paying back your loan.
Which mortgage lenders offer Help to Buy mortgages?
In 2018, there are many lenders that offer Help To Buy mortgages. It’s not just your high street lenders, but also more specialist lenders who don’t have high street branches.
Top 10 – Help to Buy mortgages: