What is the Help to Buy mortgage scheme?

Owning a property is a dream many feel is out of reach. However, the Help to Buy mortgage scheme makes buying a property easier. Here’s everything you need to know.

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How does it work?

If you want to buy a new build home, then the government can offer you an equity loan. You’ll be able to borrow up to 20% of the properties cost, which means you only need a 5% deposit. There are no fees for the first five years of the loan.

Who can apply?

Both first-time buyers and existing homeowners can apply for the scheme, but it can’t be a second home or property to rent out.

All applicants have to take out a repayment mortgage and cannot exceed the property price limits which are:

England: £600,000
Wales: £300,000
Scotland: £230,000
Northern Ireland: There are different schemes available – https://www.co-ownership.org/.

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It’s worth mentioning at this point, that there are schemes available for those that wish to rent out a property. The Buy to Let scheme works similarly to the Help to Buy scheme.

If you’re considering letting out a property, then it’s advisable to use a company specialising in property management Cheltenham has companies such as https://www.completepropertygroup.co.uk/property-block-and-estate-management/ that offer a specialised service.

What are the interest rates?

For five years you’ll pay no interest on your loan but after that, you’ll incur charges. In the sixth year, 1.75% will be added. After six years, your fees will depend on the Retail Price Index. You’ll also have to pay an extra 1% each year.

The advantages of Help to Buy

The Help to Buy scheme has many advantages:

You don’t need a large deposit
You can access cheap mortgage rates
You can own a home instead of renting
You get five years interest-free

Things to consider

If you’re thinking of getting a Help to Buy loan, then you need to consider these important factors:

Your loan will get more expensive over time
You can only choose certain lenders
There’s less home choice
The fees and terms could change

Take your time to think about the cons, but remember the Help to Buy scheme offers buyers a chance to get on the property ladder and enjoy the benefits of owning a home.