Getting Started On Help-To-Buy
If you are looking to buy your new property, you are in luck.
There are a lot of new properties being built in London at the moment and the government’s scheme can help you purchase if you’re finding it difficult to purchase via more traditional avenues. The government can lend you up to 40% of the value of your new property in London as an Equity Loan.
Interested? Here is everything you need to know about Help to Buy.
What is Help to Buy?
This government scheme is essentially a loan of 40% of the price of the property with a deposit as low as 5%. However, the property must be under £600,000 in London.
Equity loans are available to first time buyers as well as homeowners looking to move.
How much can I borrow?
In London, you can borrow up to 40% of the purchase price of the property, whilst in England it’s up to 20% of the purchase price. You’ll need to have at least 5% of the purchase price as a deposit.
For the rest of the amount, you will have to borrow from a mortgage lender.
In short, you need to pay 60%, either from your own pocket or from a commercial lender, including a minimum of 5% deposit of the purchase price, and the government will pay the rest of the 40%.
Like most mortgage lenders, there is an interest rate, but it is incredibly low:
- First 5 years: £1/month management fee
- Year 6 onwards: £1 + 1.75% interest rate (increase annually in RPI plus 1%)
Let me break it down for you:
How Do I Apply?
Requirements for candidates:
- You need to be a first time buyer or a homeowner looking to move
- You cannot rent out or sublet the Help to Buy property
- The property you want must be newly built, registered with Help to Buy and priced no more than £600,000
- You must not own any other properties at the time you purchase your new home with a Help to Buy loan
- You have to pass a financial assessment
- You cannot exchange your current home to buy a Help to Buy property under any home exchange deal
- Your debt to household income ratio must not be more than 45%
If you meet all the requirements, congratulations! You can apply for the scheme.
Here is what to do next:
- Hunt for new developments which are registered with the Help to Buy scheme. On the James Pendleton website, there is a ‘Help to Buy’ stamp on the property listing
- Reserve the property, and pay your reservation fee (usually under £500)
- Apply for the Help to Buy equity loan. You have to send them your property reservation form as well. You can do this online
- Help to Buy London will respond in 4 working days
- Once they say yes, you can apply for your mortgage!
If you are interested in buying your first through the Help to Buy scheme but don’t know where to start, have a chat with us, we’d love to help you out.
For more information, visit: https://www.helptobuy.gov.uk/