The Government’s Help to Buy schemes are to help buyers with small deposits (5% or over). The availability of high loan-to-value (LTV) mortgage products has reduced over the past few years, but now with these schemes the government hopes to support thousands more people get on the property ladder, move up or move on to their next home.
Help to Buy: Equity Loans are only available to first time buyers but the newly launched Mortgage Guarantee scheme is eligible for both existing homeowners and first time buyers. Find out more about these schemes.
Help to Buy: Equity Loan (2021-2023)
Help to Buy London is a government scheme designed to help first time buyers who have never owned a property/land before to advance up the property ladder in London.
The property you buy must:
How does it work?
Help to Buy is an equity loan from the government up to 40% of the value of a property, provided you have a deposit of 5% you will only need a mortgage of 55% of your new home.
What properties can I buy with Help to Buy London?
New build properties within the 32 boroughs of London up to the value of £600,000 are eligible for the Help to Buy London scheme.
When getting a mortgage you will be able to borrow up to a maximum of 4.5 times your salary.
Help to Buy London equity loan example
|For a property worth £400,000||Amount||Percentage|
How do I pay back the Help to Buy London equity loan?
You must pay back the loan after 25 years or when you sell your home - whichever comes first.
You will not be charged any interest on the 40% loan for the first five years of owning your home.
However a management fee of £1 a month will be applicable from the date of purchase for the duration of the equity loan.
From year six, a fee of 1.75% is payable on the equity loan, which rises annually by CPI (Consumer Price Index) inflation plus 2%.
For full information about the scheme, please visit helptobuy.gov.uk
Announced in the March 2021 budget, the Mortgage Guarantee Scheme is available from April 2021 and offers the chance for first time buyers, as well as existing homeowners, to obtain a mortgage loan of 95% of the value of a property, provided they can raise a deposit for the remaining 5%.
As it’s a high amount, lenders are being incentivised by the government (through a guarantee system that compensates them for a portion of their losses in the event of foreclosure) to encourage them to make the funds available to borrow.
It applies to any property under the value of £600,000, a new build or an older property, and is not restricted to first time buyers as some schemes are.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Embrace Financial Services usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.