Help to Buy Schemes: Option 1

Mortgage Guarantee Scheme-How does it work?

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.

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.

Example: for a home with a £200,000 price tag

Option 1
Who is eligible? 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 must not 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 size of the mortgage you apply for must be less than 4.5 times your income. The Help to Buy: mortgage guarantee scheme will run for three years until 31 Dec 2016.

Help to Buy Schemes: Option 2

Mortgage Equity Scheme-How does it work?

With a Help to Buy: equity loan the Government lends you up to 20% of the cost of your new-build home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. You won’t be charged loan fees on the 20% loan for the first five years of owning your home. Example: for a home with a £200,000 price tag
Option 2

 

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%).

 

You’d need to pay off your mortgage with your share of the money.

 

For more information on Help to Buy Schemes, call now on 020 8441 2605 or click here for our enquiry form.