For the last few months I have focussed on savings and how to plan for the future for you and your family. In this month’s finance page I’ll review the Government Help to Buy home ownership scheme for those of you who want to buy your home but are struggling to find the deposit required.
There are 4 types of Help to Buy schemes; Help to Buy equity loans, new buy, shared ownership and finally help to buy mortgage guarantees (available from January 2014). I will review the first two of those this month.
Help to Buy equity loans are open to both first-time buyers and home movers on new-build homes worth up to £600,000. You won’t be able to sub-let your home if you use this scheme.
With a Help to Buy equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 20% of the price
- you’ll need a mortgage of up to 75% to cover the rest
- You won’t be charged loan fees for the first 5 years of owning your home.
- In the 6th year, you’ll be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.
The home will be in your name, which means you can sell it at any time. You’ll have to pay back the equity loan when you sell your home or at the end of your mortgage period – whichever comes first. You can also pay back some of your equity loan without selling your home. You can pay back either 10% or 20% or the total amount, so long as the loan is worth at least 10% of the value of your home.
NewBuy lets you buy a newly built home with a deposit of only 5% of the purchase price.
To qualify for NewBuy, your new home must be:
- a new build – being sold for the first time or for the first time in its current form (eg a new flat that used to be part of a house)
- priced £500,000 or less
- your main home (you can’t use NewBuy to buy a second home or a buy-to-let property)
- owned fully by you (you can’t use NewBuy for shared ownership or shared equity purchases)
- built by a builder taking part in the scheme
To qualify you must be either a UK citizen or someone with the right to remain indefinitely in the UK. You don’t have to be a first-time buyer and there’s no limit on your level of income. But you can’t use NewBuy with any other publicly funded mortgage scheme.
Our mortgage advisers will be pleased to discuss and can be contacted on 01582 715777.
Lyndhurst Financial Management Limited.
Authorised and Regulated by the Financial Conduct Authority.