There are a range of government schemes available to help people purchase houses.
Help to Buy: Equity Loan
As a first-time buyer, you can get an equity loan towards the cost of buying a new-build home!
Keep going to see if you’re eligible!
How it works!
You’ll need to:
- Pay a minimum deposit of 5% of the property purchase price
- Arrange a repayment mortgage of at least 25% of the property purchase price
You can then borrow an equity loan to cover from 5% and up to 20% of the property purchase price of your newly built home.
If the property is in London, you can borrow up to 40%.
The equity loan percentage you borrow is used to calculate your interest and equity loan repayments.
You do not have to pay interest for the first 5 years. In the sixth year, you’ll be charged interest at a rate of 1.75%.
This will be applied to the equity loan amount you originally borrowed (the equity loan percentage of the property purchase price).
This annual interest is spread over the year in monthly payments.
The interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%.
Your interest payments will decrease if you make a part repayment of the equity loan. This is because the amount the interest rate is applied to will reduce.
You’ll need to pay a monthly management fee of £1 when you take out the equity loan until you pay it off.
If you change your equity loan, including if you re-mortgage or make an equity loan repayment, you’ll need to pay administration fees.
Paying back the equity loan
You can pay back part or all of your equity loan at any time.
Repayments are based on your equity loan percentage and the market value of your home at the time you want to make a repayment.
You’ll need to get a market valuation report from a chartered surveyor when you make a repayment.
Help to Buy ISA
You can no longer open a Help to Buy ISA.
I have a Help to Buy ISA
If you already have a Help to Buy ISA –
Help to Buy ISA – Buying a house
The home you buy must:
- Then you can pay in up to £200 each month.
- The government will top up your savings by 25% (up to £3,000) when you buy your first home.
Your solicitor or conveyancer will apply for the extra 25%.
You do not have to pay it back.
You can even use this scheme with the Help to Buy: Equity Loan, the rules to both schemes will still apply.
- If you are buying with someone who also has a Help to Buy ISA, both of you will get the 25% bonus, that’s a £6,000 top-up!
- You can pay into the ISA until November 2029. You can claim the 25% bonus until November 2030.
The Lifetime ISA now replaces the Help to Buy ISA, it is the only ISA scheme remaining.
- Have a purchase price of up to £250,000 (or up to £450,000 in London)
- Be the only home you own
- Be where you intend to live
Lifetime ISA – Benefits
See below the benefits and conditions of the Lifetime ISA –
Lifetime ISA – Withdrawing
You can withdraw money from your ISA if you’re:
- You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA.
Lifetime ISA – Buying your first home
You can use your savings to help you buy your first home if all the following apply:
- Buying your first home
- Aged 60 or over
- Terminally ill, with less than 12 months to live
Lifetime ISA – Buying with someone else
If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too.
- The property costs £450,000 or less
- You buy the property at least 12 months after you make your first payment into the lifetime ISA
The Mortgage Guarantee Scheme
The Mortgage Guarantee Scheme helps you secure a 95% Loan to Value (LTV) mortgage.
The mortgage guarantee scheme, launched on 19 April 2021.
Helps to increase the supply of 5% deposit mortgages for credit-worthy households by supporting lenders to offer these products through a government backed guarantee on new 95% mortgages until 31 December 2022.
It’s available from participating lenders across UK on properties with a purchase price of £600,000 or less, where a borrower has a deposit of 5%. Available to first time buyers and existing homeowners who are looking to move and require a 95% Loan-To-Value mortgage.
If you can’t quite afford the mortgage on 100% of a home, Shared Ownership offers you the chance to buy a share of your home and pay rent on the remaining share.
To find out more –
Check out our mortgage FAQ’s!