You can get a low-interest loan towards your deposit, to help you get on the property ladder.
If you are a first time buyer that has never owned a property/land ever, Help to Buy South East England is a government scheme designed to help you advance up the property ladder in South East England.
The property you buy must:
Help to Buy is an equity loan from the government up to 20% of the value of a property, provided you have a deposit of 5% you will only need a mortgage of 75% of your new home.
New build properties in South East England up to the value of 437600 are eligible for the Help to Buy South East England scheme.
When getting a mortgage you will be able to borrow up to a maximum of 4.5 times your salary.
Inside of London the government loan is up to 40% instead of 20%, meaning that your mortgage will be up to 55% of the property rather than 75%.
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 20% 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 a property worth £400,000||Amount||Percentage|
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.
When purchasing using Help to Buy there are
two applications to proceed with, the
mortgage application and also a separate
application for Help to Buy. The Help to Buy
application process has its own criteria and
affordability checks that often differ from
those of the mortgage lenders.
As such, it is vital that you speak to an intermediary who understands the Help to Buy scheme and who has access to the Help to Buy affordability calculator. This will allow you to accurately confirm your budget before looking to view any properties.
This calculation is for illustration purposes only. Please contact our mortgage partner Alexander Hall for Help to Buy mortgage advice.
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