Home Buy Help to Buy

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Help to Buy

The initial launch of Help to Buy offered two schemes; an Equity loan, as outlined by the diagram below and a Mortgage guarantee scheme which has encouraged more lenders to offer high loan to value mortgages at competitive rates. From February 2016 the equity loan scheme has been widened to include a Help to Buy London proposition

Help to Buy Equity Loan

Scheme 1
Equity loan

Help to Buy Mortgage Guarantee

Scheme 2
Help to Buy London

Type of property New builds only New builds only
Maximum home purchase £600,000 £600,000
Minimum deposit 5% 5%
Maximum deposit n/a n/a
Equity loan from Government up to 20% of property value up to 40% of property value
Scheme fees 1.75% of loan value in sixth year.
Then RPI + 1% per annum
£1 a month in the first 5 years
1.75% of loan value in sixth year
Then RPI + 1% per annum
Mortgage required up to 75% of property value up to 55% of property value
For first time buyers? Yes Yes
For existing homeowners? Yes Yes
For investment properties? No No
For buy-to-let homes? No No
For interest-only mortgages? No No
For repayment mortgages? Yes Yes
Available from 1st April 2013 1st February 2016
Available to 2020 TBC

* The government will guarantee part of the repayment of the mortgage to the lender, therefore increasing the availability of mortgages at competitive interest rates.

Scheme 1: Help to Buy equity loan example

For a property worth £200,000 Amount Percentage
Cash deposit £10,000 5%
Equity loan £40,000 20%
Your mortgage £150,000 75%

If the home in the table above sold for £210,000, you'd get £168,000 (80%, from your mortgage and the cash deposit) and pay back £42,000 on the loan (20%). You'd need to pay off your mortgage with your share of the money.

Scheme 2: Help to Buy London example

For a property worth £400,000 Amount Percentage
Cash deposit £20,000 5%
Equity loan £160,000 40%
Your mortgage £220,000 55%

If the home in the table above sold for £420,000, you'd get £252,000 (60%, from your mortgage and the cash deposit) and pay back £168,000 on the loan (40%). You'd need to pay off your mortgage with your share of the money.

For more details visit the Help to Buy website

Call 0800 369 8667 for further information about selling your home, or to find out how much your property is worth