What is Help to Buy*?
Help to Buy* and Help to Buy (Scotland)** are new Government-backed schemes to help buyers secure a mortgage on a new build home. It means that home buyers can own a home with only a 5% deposit. And remember that these initiatives are available to all buyers, not just first time buyers.
How does it work?
There are two schemes available, Help to Buy: Equity Loan* and Help to Buy: Mortgage Guarantee^.
With Help to Buy: Equity Loan*, you’ll receive funding from the Homes and Communities Agency (HCA) to help you secure a mortgage. With Help to Buy (Scotland)**, funding will be provided by the Scottish Government.
The Help to Buy: Mortgage Guarantee^ scheme works exactly the same way as any other mortgage except the government supports the lenders by providing a guarantee on part of the mortgage loans. This means they can offer home buyers 95% mortgages.
Under the mortgage guarantee scheme, there are no additional fees to pay the government and the property you purchase must be your only home.
These schemes have been designed to assist those who would be able to sustain a mortgage, but who cannot currently acquire one due to large deposit requirements.
Here's an example of the equity loan scheme:
Pay from only £104,000 now
Based on a £130,000 purchase price
- 5% Deposit £6,500
- 75% Mortgage £97,500
- 20% Help to Buy Equity Loan £26,000
Help to Buy* and Help to Buy (Scotland)** offer up to a maximum of 20% of the purchase price through an equity loan funded by the English and Scottish Governments. The remaining 80% is then made up through a 5% deposit contribution and a 75% mortgage from a bank or building society.
The equity loan is available on new build properties up to a maximum value of £600,000 in England, and £400,000 in Scotland. Further information is available in the Help to Buy* Buyers Guide and the Help to Buy (Scotland)** Information Leaflet.
So Help to Buy* means precisely that.