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Government-backed mortgage schemes

Help to Buy: Equity Loan scheme

This scheme is designed to help first-time buyers who want to buy a ‘new build’ property from a registered Help to Buy builder.

  • You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the full purchase price of a new-build home
  • The equity loan, your deposit and your repayment mortgage cover the total cost of buying your newly built home
  • The percentage you borrow is based on the market value of your home when you buy it
  • You do not pay interest on the equity loan for the first 5 years and then start to pay interest  in year 6, on the equity loan amount you borrowed
  • The equity loan payments are interest only
  • You can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.

In Scotland, Help to Buy(Scotland) and First Home Fund for first-time buyers, are no longer available.

In Wales, the Help to Buy scheme supports the purchase of homes up to £250,000

Help to Buy: Shared Ownership

This scheme helps those on lower incomes and first-time buyers who might not otherwise be able to get onto the housing ladder to purchase a property and is a cross between buying and renting.  Many of the major lenders will grant mortgages for a shared ownership home.

In England, under the scheme, you can buy between 25% and 75% of a property, with an option to purchase a bigger share of the property at a later date. You’ll need to take out a mortgage to pay for your share of the property’s purchase price and then pay rent on the remainder. So, for example, if a property within the scheme is worth £200,000 and you bought 50% of it, you will pay rent on £100,000. If the rent charged by the housing association share is charged at 3%, then you would pay £3,000 a year in rent, as well as repaying your mortgage.

Most of the properties available under the scheme are new build, but some are properties being resold by housing associations.

The rules of the scheme operate differently in Scotland, Wales and Northern Ireland.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.

Help to Buy: Equity Loan scheme

This scheme, which is currently set to operate until March 2021, is designed to help those who only have a small amount available as a deposit and who want to buy a ‘new build’ property from a registered Help to Buy builder.

In England, the government will lend you up to 20% of the purchase price interest-free for the first five years, providing you can put down a deposit of at least 5%. In year six, you will be charged 1.75%, which climbs at a rate of 1% of that figure, plus any increase in inflation (measured by the Retail Prices Index), every year thereafter. In London, you can borrow up to 40% of the purchase price.

This means you will need a mortgage for 75% of the purchase price (or 55% if you’re buying in London) and this must be a repayment mortgage to qualify. The scheme is available on properties with a purchase price of up to £600,000.

The scheme operates slightly differently in Scotland, where the government takes a 15% stake and the property purchase price cannot be more than the threshold price, which for the tax years 2019/20 and 2020/21 is £200,000.

In Wales, the scheme applies on homes costing up to £300,000.

Help to Buy: Shared Ownership

This scheme helps those on lower incomes and first-time buyers who might not otherwise be able to get onto the housing ladder to purchase a property and is a cross between buying and renting.  Many of the major lenders will grant mortgages for a shared ownership home.

In England,under the scheme, you can buy between 25% and 75% of a property, with an option to purchase a bigger share of the property at a later date. You’ll need to take out a mortgage to pay for your share of the property’s purchase price and then pay rent on the remainder. So, for example, if a property within the scheme is worth £200,000 and you bought 50% of it, you will pay rent on £100,000. If the rent charged by the housing association share is charged at 3%, then you would pay £3,000 a year in rent, as well as repaying your mortgage.

Most of the properties available under the scheme are new build, but some are properties being resold by housing associations.

The rules of the scheme operate differently in Scotland, Wales and Northern Ireland.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.