Help to Buy mortgages explained

Paul Demarco explains everything you need to know about Help to Buy mortgages

htb_logo_rgb smThe new Help to Buy scheme recently introduced by the UK and Scottish Governments allows first time buyers and home-movers to buy a property with just a 5% deposit of the purchase price of the property. Both schemes will run for approximately 3 years.

Help to Buy: Mortgage guarantee scheme

The open market scheme (mortgage guarantee scheme) will have higher interest rates as it is a 95% loan to value mortgage. This scheme is backed by the UK government and the maximum purchase price is £600,000. This allows buyers to purchase a property from the open market.

Help to Buy (Scotland): Equity loan scheme

The Help to buy Scotland (equity loan scheme) is for new build only and the Scottish Government will give up to 20% of the purchase price as a deposit with the borrower only having to find 5% of the purchase price as a deposit. The maximum purchase price is £400,000.

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Keep in mind...

There are also some other considerations to keep in mind. Firstly, you should always get an agreement in principle for the actual mortgage prior to making an offer on any property whether it be a new build or buying from the open market; this can be arranged via ESPC Mortgages.  This should be a pre-requisite prior to all other stages in the process as it will tell the client how much they can borrow.

Another thing to consider is if these schemes are actually suitable for you; if you have a larger deposit for example, they may not be the most appropriate mortgage option for you.   Finally, as the interest rate is higher with the open market scheme, you do need to speak to the IFA about their actual affordability and budget planning.

In summary this will now hopefully allow more first time buyers and home movers to purchase due to the low deposit required.

Want to know more?

Paul D 100Paul Demarco is a Financial Planning Consultant who helps clients with all their mortgage needs and requirements, identifying any other gaps that they may have and advising on a solution to any potential gaps.

You can call him on 07778 066595 for more information.

 

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The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.