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Help to buy

Help to buy

Help to Buy is a government-backed initiative aimed at helping people buy a home. It will help both first time buyers and existing home owners purchase a home with as little as 5% deposit.

There are two ways to purchase a property up to the value of £600,000 using Help to Buy:

  • Mortgage guarantee – available on both pre-owned and new build properties with a standard mortgage of up to 95% of the purchase price.
  • Equity loan – available on new build properties only, using a government equity loan of up to 20% of the purchase price plus a traditional mortgage.

Mortgage guarantee

How does it work?

A mortgage supported by the Help to Buy: mortgage guarantee scheme works in exactly the same way as any other mortgage except that under the scheme the Government offers lenders the option to purchase a guarantee on mortgage loans.

Because of this support, lenders taking part are able to offer home buyers more high-loan-to-value mortgages (80-95%).

You will still be fully responsible for your mortgage repayments. So if you have a 5% deposit, you will need to take out and pay back a 95% mortgage.

Example: for a home with a £200,000 price tag

– See more at: http://www.helptobuy.org.uk/mortgage-guarantee/how-does-it-work#sthash.eXnKuEly.dpuf

Equity Loan

How does it work?

With a Help to Buy: equity loan the Government lends you up to 20% of the cost of your new-build home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.

You won’t be charged loan fees on the 20% loan for the first five years of owning your home.

Example: for a home with a £200,000 price tag

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

For more information, (including advice on fees and paying back your loan) please download our

– See more at: http://www.helptobuy.org.uk/equity-loan/equity-loans#sthash.1o1kWLMU.dpufThe scheme works behind the scenes by offering lenders the option to purchase a guarantee from the government on mortgages where a borrower has a deposit of between 5% and 20%. The guarantee offers lenders an ‘indemnity’ or insurance cover, which will compensate them for most of any loss they may suffer if the property has to be repossessed and there is insufficient equity in the property to fully repay the lender.

You don’t have to be a first-time buyer and pre-owned homes are eligible as well as new-build properties. **Please embed the following http://www.helptobuy.org.uk/docs/default-source/default-document-library/help-to-buy-equity-loan-buyers-guide.pdf?sfvrsn=4

Who is eligible?

Equity loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a price tag of up to £600,000.

You won’t be able to sublet this home or enter a part exchange deal on your old home. You must not own any other property at the time you buy your new home with a Help to Buy equity loan.

This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.