Help to Buy
Help to Buy is a government scheme that means you could move home with a deposit as low as 5 per cent of the purchase price.
The Help to Buy scheme allows you to own 100 per cent of a newly-built home with just a 75 per cent mortgage and a 5 per cent deposit. The remaining 20 per cent of the purchase price is paid for with a loan from the government (subject to approval).
The loan is interest-free for five years and can be repaid at any time or on the sale of the home.
The scheme is available only in England. The Scottish, Welsh and Northern Irish governments have similar schemes, however – check their websites for details.
What are the benefits of a Help to Buy loan?
- 75 per cent mortgage.
- Only 5 per cent deposit required.
- 20 per cent equity loan from the government - interest-free for the first 5 years.
- Equity loan can be repaid at any time or on the sale of the home.
How does the Help to Buy loan work?
- You put down a deposit of at least 5 per cent.
- The government lends you up to 20 per cent of the property's value as an equity loan.
- You take out a mortgage on the rest of the property's value (so, if your deposit was 5 per cent and your equity loan was 20 per cent, you would then take out a 75 per cent mortgage).
Help to Buy in London
In London you can get a loan of up to 40 per cent of the value of the home, not the 20 per cent on offer in the rest of England, because of the high cost of housing in London. There are details of the London Help to Buy scheme are here.
Help to Buy Shared Ownership
If you can’t afford the mortgage to buy 100 per cent of a home – even with a Help to Buy loan – Help to Buy Shared Ownership offers you the chance to buy a share of your home (between 25 and 75 per cent of the home’s value) and pay rent on the remaining share. If you wish, you can buy a bigger share later on when you can afford to.
Details of Help to Buy Shared Ownership are here.
There is more information about all aspects of Help to Buy on the government’s official website for the scheme here.