Help to Buy Mortgages
Our mortgage specialists are dedicated to helping first-time buyers step onto the property ladder. If you’re looking to buy your first property, a Help to Buy mortgage could very well be the answer. Please note that this scheme ends in March 2023, so time is very much of the essence.
What is Help to Buy?
The Help to Buy scheme was designed by the government as a means of making purchasing your first home a simpler and smoother process. Specifically targeted at people who are buying a main residence for the first time, the scheme is available on new build homes in Worcestershire and across England.
How does Help to Buy work?
Rather than having to save up a large deposit that can seriously affect the time it takes to buy your first home, a Help to Buy mortgage allows a cash deposit of as little as 5% of the property value.
The government then lends you up to 20% of the cost of the property, which means that the mortgage you take out with a commercial lender is just 75% of your new home’s purchase price.
Key features of Help to Buy
- The loan is interest free for the first five years, after which an interest rate of 1.75% on the outstanding amount will be applied, increasing by inflation +1% each April.
- Help to Buy is only available on new build homes in England up to the value of £600,000.
- As with all mortgages, you need to ensure that you can afford to make the monthly payments before taking out a Help to Buy Equity Loan.
Help to Buy shared ownership
If you can’t quite afford to purchase a full property to yourself, Help to Buy presents an excellent solution. Help to Buy shared ownership involves buying a share in a new leasehold property (which could be a house or an apartment) on a part-buy and part-rent basis. Your monthly mortgage payments will be calculated according to the percentage of the home you own, as well as a subsidised rental fee on the percentage that’s shared by other residents.
Due to you only purchasing a piece of the property, your cash deposit and mortgage payments will be significantly lower than if you were to buy an entire home.
What happens if I sell my home?
When the mortgage is paid off or if you decide to sell your property in the future, the equity loan plus a share of any increase in value needs to be repaid to the government.
Key features of Help to Buy shared ownership
- You can’t afford to buy a home on the open market.
- You have a household income of less than £80,000 per year.
- You are a first-time buyer.
- You are at least 18 years of age.
- Most people buy a share of between 25% and 75% in a new home. However, since April 2021 the minimum share has been reduced to just 10%. You then also pay a subsidised rent, usually to a housing association, for the remaining share.
- The share you buy is worked out by the Registered Provider (usually a Housing Association) according to what you can afford. The bigger the share you buy, the less rent you have to pay.
- You will need to be able to raise a mortgage for the share you want to purchase unless you have sufficient savings to buy your share outright.
Get in touch
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Help to Buy Mortgages in Worcestershire and Kent
Droitwich Office
5 Saltway, Droitwich, Worcestershire, WR9 8LB 01905 779697
Sevenoaks Office
46 Holly Bush Lane, Sevenoaks, Kent, TN13 3TL 01732 926255
