Help To Buy Mortgage
Updated 15th November 2020
Our Mortgage Experts Online accredited advisors are specialists in Help to Buy mortgages. Our experts knowledge will help you to find the right Help to Buy mortgages on the market to meet your specific requirements.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. As a first-time buyer, this may feel completely overwhelming to you and you may have no idea where to start. We can offer you guidance and help you navigate the complex world of Help to Buy mortgages.
The brokers we work with are whole of market and offer completely unbiased advice, ensuring that you get the absolute best deal available.
Help to Buy will change on 31st March 2021
The current Help to Buy scheme ends in March 2021. There are certain situations where this can be extended slightly. You can find out that latest government guidance regarding help to buy extensions here (adjusted for uncertainties in light of Covid-19).
In this article, we are going to concentrate on the new scheme which is running from April 1st 2021 until 31st March 2023.
The information below will cover all aspects of the Help to Buy loan. If you are unsure about anything, give us a call on 0300 124 5655 or enquire online to speak to one of our mortgage experts.
What is a Help to Buy Mortgage?
Help to Buy is a government-backed equity loan scheme. You won’t pay any interest on the loan for the first 5 years. The scheme was designed to get the housing market moving and to assist people getting onto the property ladder.
How does the Help to Buy Mortgage Equity loan work?
The government will put in 20% deposit as an equity loan. You will need to put in a minimum of 5%. The remainder will be made up from a mortgage lender.
There isn’t any interest charged in the first 5 years of owning your property. After this period, you will be charged a fee of 1.75% of the loan amount. This will rise annually by 1% plus the retail price index
The diagram below shows an example on a £200K house.
London Help to Buy mortgage equity loan
London house prices are the highest in the country, so to reflect this the government increased the size of the equity loan to 40%. This amount is restricted to the Greater London area. Your Help to Buy agent will be able to advise you on if the property qualifies for the 40% loan.
More information on Help to Buy mortgages in different geographical locations can be found here.
The example below is based on a £400K house in the Greater London area.
Help to Buy Mortgage Scheme 2021-2023, England
The new Help to Buy scheme starts on the 1st April 2021. It is different form the previous Help to Buy scheme and there are more criteria around it. Applications for the new scheme are being taken from Autumn 2020.
Help to Buy have imposed price caps for each region. Below is a list of the regions and prices.
|Yorkshire & Humber||£228,100|
|East of England||£407,400|
New criteria for 2021-2023
This new Help to Buy scheme is only available for first time buyers. If this is a joint application, both applicants must be first time buyers.
No interest will be charged for the first 5 years of the equity loan. Then the fee is 1.75% of the loan, this will rise each April by Consumer Price Index plus 2%. The £1 a month management fee will remain in place.
You can repay the Help to Buy equity loan in minimum 10% payments. If you sell the property, the loan must be repaid.
Help to Buy Mortgage guidelines 2021-2023
With any loan there are rules and guidelines to follow. Below are a few of the major points to keep in mind:
- Buyer must provide minimum 5% deposit.
- Equity loan is interest free for 5 years.
- After 5 years 1.75% fee rising in line with the consumer price index plus 2%.
- Equity loan is only for 25 years.
- Property cannot be sub-let.
- Scheme only available to first time buyers.
- New build properties only.
What happens when I sell my Help to Buy home?
When you sell your property, you will need to repay the equity loan. This will be calculated at 20% of the current property sales price and must be sold at market value. An independent valuer must decide on what the property is worth.
Can I get a Help to Buy Mortgage with bad credit?
The options available to you will be limited, but there are lenders who will facilitate a bad credit Help to Buy Mortgage. The more historic the adverse, the better your chances will be. Our mortgage experts have helped people get a Help to Buy Mortgage with the following bad credit.
- No credit history
- A low credit score
- Late payments
- Payday loans
- Missed mortgage payments
- Mortgages with defaults
Learn more about bad credit mortgages here.
Speak to a Help to Buy Mortgage Advisor
There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or cannot borrow what they need. Remember, just because one lender has declined you, don’t give up!
Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.
The expert advisors we work with have experience in dealing with all aspects of Help to Buy Mortgages, and crucially use the whole of the market to access the best deals available.