Help to buy is spit into two different parts, equity loan and mortgage guarantee but only one can be applied for by mortgage borrowers.
Knowing how to applying for the help to buy scheme and which one is most suitable for your needs can be difficult but a mortgage adviser can help.
Help to Buy: Equity Loan
Borrowers can applying for a loan worth 20% of a newly build property which they wish to purchase which can be repaid over 25 years.
The equity loan scheme allows borrowers to apply for a 75% mortgage instead of 80% and they’ll need to put out down just a 5% deposit.
Borrowers need a specialist advisor to help them apply for the equity loan but our mortgage advisor will be able to contact them on your behalf.
Repaying Equity Loan
If the borrowers sells the house within the 25 years they will be due to repay the loan using the same percentage from the proceeds of the house. For example, if someone got an equity loan worth 10% of the property value, they would be required to pay 10% of the sale proceeds to the government if they sold the property.
For the first 5 years no interest is charged on the loan after which it will be 1.75% and will rise annually 1% above the retail price index.
Help to Buy: Mortgage Guarantee
Mortgage guarantee offers lenders a safeguard in case a borrower defaults on their mortgage and a property has to be repossessed.
The mortgage guarantee scheme can only be applied for by participation mortgage lenders but a qualified mortgage adviser will know who they are.
Because the mortgage is more protected against defaults lenders are often more likely to offer higher loan-to-value ratios, meaning most only need a 5% deposit.
How Do I Apply
Quite simply you don’t, however you will need to apply for a mortgage with a lender who is taking part in the scheme and offering it to borrowers.
If you don’t know which lenders are taken part in the mortgage guarantee scheme either look for the help to buy sign or speak with one of our mortgage advisers today.
Check some of the Mortgage Guarantee deals currently available on the market through lenders who are taking part in the scheme.