The Department for Communities and Local Government (DCLG) announced last month that the Help to Buy equity loan scheme is here to stay – well at least for the next four years.
So What is Help to Buy?
Help to Buy is equity loan scheme is to support would-be homebuyers. Loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a price tag of up to £600,000 in England and Northern Ireland, £300,000 in Wales and £200,000 in Scotland.
To qualify for the scheme you must meet the following criteria:
• looking to buy a house in which you will live
• not want to sub-let or rent out the property to anyone else
• be your only home
You also need a 5% deposit and a mortgage of up to 75% for the rest (or up to 55% in London). In return, the government will lend them up to 20% (or up to 40% in London).
There are no fees on the loan for the first five years. In the sixth year, people are charged a fee of 1.75% of the loan’s value. This fee then increases every year, in line with the Retail Prices Index plus 1%.
The loan itself can be paid back in full or in part at any time. The full amount needs to be paid back after 25 years or when the home is sold, whichever comes first. The amount people pay back depends on the market value of the property at the time.
For more information and how to apply, check out the Government’s Help to Buy website or find your local Help to Buy agent here