Can The Government Help You To Buy?

27th November 2015

There are lots of terms and schemes talked about when you are looking to buy a property – and sometimes it can seem like a minefield.

Today we explore the world of Help to Buy – and hopefully make your options a little easier to understand.

Help to Buy is a government scheme which helps people buy their home. There are slightly different versions of it – but ultimately it is a initiative  - that means you only need to save 5% of the deposit on your dream home to be able to get on or move up the property ladder.

The government scheme first landed in April 2013 and there are three types of Help to Buy schemes that may suit differing mortgage needs – and are dependent on where you live.

The Help to Buy: ISA  (the newest initiative from the government) helps first time buyers in the UK, The Help to Buy: Equity Loan helps people buying new homes in England and Help to Buy: Mortgage Guarantee  suits people trying to buy new build or existing homes in the UK.

The Help to Buy: ISA is perfect for you if you’re saving for your first home. By saving into a Help to Buy:ISA, the government will boost your savings by 25% - up to a maximum investment of £3,000 – thus helping you save your deposit faster and get you on the property ladder quicker. To qualify for the Help to Buy: ISA scheme you have to be a first time buyer  - and not own a property anywhere in the world. Importantly you mustn’t have another active cash ISA in the same tax year.

The Help to Buy: Equity Loan is dedicated to the new homes market. In this version of the scheme, the government lends you up to 20% of the cost of your new build property which means you will only need to save a 5% deposit and the rest will of course be your mortgage. It also means that you won’t be charged loan fees for the first five years of living in your new home – remember though this is a loan and will need to be repaid. This government initiative is only available in England – and is available to homeowners and first time buyers. However your property must not be worth more than £600,000. This is only relevant to you if you want to live in your home – as part of this agreement, you’re not allowed to sublet the property.

The Help to Buy: Mortgage Guarantee works as a normal mortgage would – except the government offers lenders (so the mortgage providers) the option to purchase a guarantee on the mortgage loans. This means for the mortgage providers the risk is less to their business so they can lend you more money – up to 95% of the property worth.

The mortgage guarantee scheme will run up until December 2016. As with any mortgage, the lender will check your affordability so your credit history will be important.

These government schemes are worth researching to help get on the property ladder – but as with any financial plan; it is always worth checking all your options before you sign on the dotted line.

Can The Government Help You To Buy?

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