What help to buy schemes are available?
There are three main Help to Buy options, the Help to Buy Equity Loan, Help to Buy London and the Help to Buy Isa.
Help to buy equity loan
Who can do it: First- time buyers and home movers with a 5% deposit
House price: A home worth less than £600,000 in England and £300,000 in Wales
Property type: New build
What is it?
The government lends first-time buyers and existing home owners 20% of the deposit towards a newly build property. As a minimum you would need to put in 5% of the deposit and be able to arrange a mortgage of 75% mortgage of the overall cost of the property to qualify. The government loan won’t carry fees for the first five years of owning your home. But in year six you start paying interest. You can repay the loan in full at any time while you’re living in the house but it has to be repaid in full after 25 years (if you’re still there). If you sell the house sooner, you’ll have to repay the loan when you move.
Help to buy London
Who can do it: First-time buyers and home movers looking to buy in a London Borough with a 5% deposit
House price: A home worth less than £600,000
Property type: New build
What is it?
The government lends first-time buyers and existing owners 40% of the deposit towards a newly built home. As a minimum you would need to put in a 5% deposit and be able to arrange a mortgage of 55% of the overall cost of the property you want to purchase. The loan doesn’t carry fees for the first 5 years of owning you home. Bu, as with the equity loan in year six you’ll start paying interest on the government loan.
You can repay the loan in full at any time while you’re living in the house but you must do it after 25 years if you’re still there. If you sell the house sooner, you’ll have to repay the loan when you move
Help to buy ISA
The Help to Buy ISA can help you save towards the deposit on your first home. Under this scheme the government will top up your savings by 25%. For every £200 you save each month, the government will contribute £50 up to a maximum of £3,000 on savings of £12,000. The maximum amount you can pay into your Help to Buy ISA each month is £200 but, as a bonus, when you first open the account you’re allowed o make an additional contribution of £1,000, meaning you can save £1,200 in the first month.
Unlike the other Help to Buy schemes the ISA is only available for first-time buyers. The government bonus is paid only when you buy a property, so you won’t get the 25% top-up if you use the money for something else. You can use the Help to Buy IA to purchase a property worth up yo ™250,000 – or, if you’re buying in London, £450,000.
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This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.
