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Help to Buy

Help to Buy is a government scheme initially designed to help first-time buyers struggling to get on the property ladder. However, some of the schemes also help people who have purchased a property before. A range of Help to Buy home ownership schemes are available in England, but there are some restrictions and rules for applying. Here we will provide an overview of the different Help to Buy schemes out there and explain how they could work for you.

Equity Loan

Help to Buy Equity Loan buyers are offered up to 20% of the cost of a new build home by the government. You only need to provide a 5% cash deposit. You will need a mortgage to make up the other 75% of the property’s value. You also won’t have to pay fees on the 20% loan for the first five years of owning your home. In the sixth year, you’ll be charged 1.75% interest, then the fee rises by inflation based on the Retail Prices Index (RPI), plus 1% each year.

The Help to Buy Equity Loan scheme finishes in March 2021.

Who is eligible for a Help to Buy Equity Loan?

To be eligible for a Help to Buy loan, you must:

  • Be able to demonstrate access to savings or funds to pay a deposit of at least 5% of the purchase price, plus legal fees, stamp duty and costs of moving
  • Be purchasing a property worth £600,000 or less
  • Have a good credit history
  • Take out a mortgage with a qualified lender (e.g. a bank or building society)
  • You must not own any other property at the time you buy your home supported by the Help to Buy

You cannot apply for a Help to Buy loan if:

  • You wish to buy a second home or a property to rent out
  • You want a different mortgage other than a repayment mortgage

 

 

The Help to Buy ISA

This helps you to save for your first home. You put money into the account and the government top it up by 25%. The maximum you can save into the account per month is £200, meaning the government will top it up by a further £50. The maximum you can receive from the government is capped at £3,000. The ISAs are available at lots of banks and building societies.

Who is eligible for a Help to Buy ISA?

  • Your initial deposit can only be up to £1,200
  • You must have saved at least £1,600 in the ISA before you can claim the minimum bonus of £400
  • When you are buying your first home, you need to instruct your solicitor or conveyancer to apply for your government bonus
  • You cannot use your bonus for the deposit due at the exchange of contracts, to pay for solicitor’s or estate agent’s fees or any other indirect costs

Read more about this and find out if you are eligible for a Help to Buy ISA at helptobuy.gov/help-to-buy-isa