Originally started by the Government as a scheme to help those those buying a new build property, the ‘Help to Buy‘ scheme was intended to change in February 2014 to allow applicants to buy any property on the open market, however this was rushed forward and started this month.
The aim is to ‘stimulate’ the housing market, and by making homeloans more accessible to people, more homeowners could ultimately decide to move up the ladder increasing the volume of available housing stock – as short supply is pushing prices hard in London right now.
The principle behind ‘Help to Buy’ is to make purchasing or even moving up housing ladder more accessible. It means existing home owners and first time buyers can purchase a home with as little as 5% deposit of their own.
The Government will guarantee up to 20% of the loan either by way of a Mortgage guarantee to the participating mortgage lender or by way of an Equity loan to the buyer.
The core idea is that borrowers can attract a much lower and more financially manageable mortgage interest rate with a 25% deposit rather than just a 5% deposit.
Mortgage applications should be no different as work is done behind the scenes by those lenders that have agreed to participate in the scheme.
Key facts of the Help to Buy scheme:
The maximum purchase price must be £600,000.
It must be your only property.
Available on all new builds and traditonal pre-owned properties.
Available for properties in the UK only.
The mortgage must be arranged with a participating mortgage lender.
Buyers must have a minimum of 5% deposit to place towards the purchase.
Its available to first time buyers and existing home owners.
For more information check out the gov.co.uk website.