Help-to-buy schemes

‘Help to Buy’ is a government-backed initiative introduced during 2013 to help people buy their own home. There are two schemes – ‘Equity Loan’ and ‘Mortgage Guarantee’ – which can help first-time buyers and existing homeowners buy a home with a minimal, 5% deposit. There is also a related, MOD scheme for members of the Armed Forces.

Help to Buy: Equity Loan

A Help to Buy: Equity Loan is available both to first-time buyers and existing homeowners. The government lends you up to 20% of the cost of your new home which means you will only need to raise a 5% cash deposit and find a 75% mortgage.

The loan can be repaid at any time during the mortgage term. You won’t be charged loan fees for the first five years of owning your new home, but after this you’ll be charged 1.75% of the loan’s value, a rate that increases annually against a statutory, Retail Price Index-related formula.  The fees don’t count towards paying back the loan itself.

The scheme is run by Help-to-Buy agents appointed by the government’s Homes and Communities Agency. The agents will help you through the entire process, explaining the eligibility and affordability criteria, guiding you through your purchase and administering the scheme itself. The scheme also offers access to a range of competitive mortgage rates.

Help to Buy: Mortgage Guarantee

The Help to Buy: Mortgage Guarantee scheme offers mortgage providers the option to purchase a guarantee on mortgage loans. Protected by this guarantee, mortgage providers can then offer borrowers a higher loan-to-value mortgage, say 80%-95%, meaning that it’s possible to arrange a 95% mortgage with a small, 5% deposit.

The mortgage works in exactly the same way as any other mortgage so you are still fully responsible for your mortgage repayments.

Armed Forces

The Armed Forces’ Help-to-Buy scheme is a loan scheme offered by the Ministry of Defence (MOD) for members of the regular Armed Forces to use in conjunction with Help to Buy. The scheme allows Britain’s Armed Forces’ personnel to borrow a 5% deposit from the MOD and then take advantage of Help to Buy.

Neither of the Help-to-Buy schemes can be used to buy a buy-to-let property and the scheme is only available for (capital) repayment mortgages, not interest-only mortgages.

For further information, please visit: www.helptobuy.org.uk

How can One Financial Solutions help you?

Buying a property, no matter whether it’s as a home or an investment, is probably the greatest financial undertaking most of us will ever make: it’s a huge commitment and one that needs to be thoroughly considered, ideally with the help of an expert guide.

The team at One Financial Solutions has a combined total of over 140 years’ experience in financial services and is there to help you make the right decisions. As a truly independent firm of financial advisers we’ll make sure the mortgage we recommend to you is selected from the entire market and is the one that is best for you.

So, if you’re looking for a mortgage or just want advice on the subject, please call us on 01372 940 640 or ask us to call you by sending an email to admin@onefinancialsolutions.co.uk.