Help To Buy
As lenders increased the price of deposits on mortgages for house buyers due to the pressures of the recent recession, the housing market grew stagnant. To change this the government launched the Help to Buy scheme.
The scheme is aimed at those with a steady income, but low savings. With as little as 5% of the total cost of the house needed for a deposit, Help to Buy provides the necessary funding to buy your home.
Help to Buy Criteria
There are three important rules for anyone thinking of applying for the scheme. You need to have at least a 5% deposit for the property you wish to buy or build and you must meet the specific eligibility requirements set out by your chosen lender. Secondly, the property in question must be your only home once purchased and you have to live in it. Lastly, the property in question must cost less than £600,000, however, for the Equity Loan scheme this varies between England, Wales and Scotland.
Help to Buy Equity Loan
The equity loan scheme allows borrowers with a deposit of as little as 5% to get onto the housing ladder. Each borrower's contribution is supplemented with a loan from government worth 20% of the property's value, with the remaining 75% obtained from a traditional mortgage lender.
This only applies to all new build properties in England worth up to £600,000. The government loan is interest-free for the first five years and then charged at a rate of 1.75% each subsequent year.