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Warning: Your home may be repossessed if you do not keep up repayments on your mortgage.

Help to Buy

What is Help to Buy?

Help to Buy is equity loan assistance to home buyers from the Homes and Communities Agency (HCA).

It makes new build homes available to all home buyers (not just first time buyers) who wish buy a new home, but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage.

Up to a maximum of 20% of the purchase price is available to the buyer through an equity loan funded by the Government through the HCA.

Help to Buy is available in England from house builders registered to offer the scheme.

Help to Buy will run from 1 April 2013 until 31 March 2016 (or earlier if all of the funding is taken up.

With Help to Buy, the buyer (‘you’) buys a new home on a new build development with assistance from the Homes and Communities Agency (‘the Agency’) in the form of an equity loan. You must take out a first mortgage (with a qualifying lending institution e.g. a bank or building society). This mortgage, together with any cash contribution from you, must be a minimum of 80% of the full purchase price. The maximum full purchase price is £600,000. Your first mortgage must be on a repayment basis. The Agency will provide an equity loan to fund the balance needed to make up the full purchase price of your home, up to a maximum of 20% of the full purchase price.

The equity loan must be repaid after 25 years or earlier if you sell your home. You must repay the same percentage of the proceeds of the sale to the Agency as the initial equity loan (i.e. if you received an equity loan for 20% of the purchase price of your home, you must repay 20% of the proceeds of the sale).

The equity loan is interest free for the first five years. After that, you will pay a fee of 1.75%, rising annually by the increase (if any) in the Retail Price Index (RPI) plus 1%.

Local HomeBuy Agents will assess and approve your purchase for Help to Buy, and you need their approval before you proceed with the buying process.

What is the Mortgage Guarantee Scheme? (or Help to Buy 2)

A mortgage supported by the Help to Buy: mortgage guarantee scheme works in exactly the same way as any other mortgage except that under the scheme the Government offers lenders the option to purchase a guarantee on mortgage loans and because of this support, lenders taking part are able to offer home buyers more high-loan-to-value mortgages (80-95%).

You will still be fully responsible for your mortgage repayments. So if you have a 5% deposit, you will need to take out and pay back a 95% mortgage. A mortgage under the Help to Buy: mortgage guarantee scheme works like any other mortgage. Your lender will check that you can afford the mortgage and that you do not have a history of payment difficulties.

To qualify for a mortgage supported by Help to Buy: mortgage guarantee:

  • The property you are purchasing could be an existing or new-build home in the UK, priced up to £600,000
  • You mustn’t own any other property anywhere in the world at the time you buy your home supported by the Help to Buy: mortgage guarantee scheme
  • Your mortgage must be a repayment one, not interest only. Offset and guarantor mortgages are also excluded from the scheme
  • You can’t let out the property to somebody else
  • Your mortgage can be taken out by an individual or individuals but not by a company
  • You cannot use the mortgage guarantee scheme with any other Government scheme such as Help to Buy: equity loan or shared ownership. Your deposit for the property can’t come from a government scheme either
  • You don’t have to pay any additional fee to Government to get a Help to Buy supported mortgage


The Help to Buy: mortgage guarantee scheme will run for three years until 31 December 2016.
 


Your home may be repossessed if you do not keep up repayments on your mortgage.

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