Help to Buy Mortgages – FAQs

Can I use Help to Buy on an old house?

Since April 2013, first-time buyers of new build properties have only needed a deposit of 5% in order to get a mortgage for up to 75% of the property’s value, with the Government loan paying the remaining 20%. From October 2013, the scheme expanded again, this time becoming available to home movers, not just first time buyers.

How long does Help to Buy application take?

Depending on you having your credit history, ID and all proofs of income available, you could receive an Authority to Proceed within one week of making an application. The Authority to Proceed is valid for three months. The majority of house builders aim to exchange contracts within one month of you making a reservation, so you should only need to make one application as everything should be completed in time.

Is Help to Buy ending?

The Help to Buy end date is in 2023, but starting in 2021 it will be available again only to first-time buyers. At the same time, it will only be available for homes with a market value up to the price cap for new regional properties. After March 2023, the government will not be introducing another loan scheme like Help to Buy – unless the situation changes after the next election.

Can I buy another house if I have Help to Buy on an existing house?

No. If you can afford to buy another house, you will have to repay the Help to Buy equity loan. The property purchased under the Help to Buy scheme must be your only residence. Help to Buy is not available to assist buy-to-let investors, or those who will own any property other than their Help to Buy property after completing their purchase.

What happens at the end of Help to Buy?

As announced in 2018: the Help to Buy scheme will end in March 2023. By March 2021 the government will have invested £22bn in the scheme, helping up to 360,000 households into homeownership.The government does not currently intend to introduce a further Help to Buy Equity Loan scheme after March 2023.

How does Help to Buy work?

With a Help to Buy: Equity Loan the Government lends you up to 20% (40% in London) of the cost of your newly built home, so you’ll only need a 5% cash deposit, and you’ll have a 75% (55% in London) mortgage to make up the rest. You won’t be charged loan fees on the Help to Buy equity loan for the first five years of owning your home either, so it’s a perfect step up onto the housing ladder for those who’ve been renting or are looking for their first home purchase.

Do you pay interest on Help to Buy?

You’ll need to pay a £1 management fee every month until the loan is repaid. The first five years of the Help to Buy equity loan is interest-free. After the interest-free years, you’ll be charged 1.75% on the outstanding amount as interest.You only repay the interest, not the equity loaned to you.

Can I give more than 5% deposit on Help to Buy?

Yes if you want to, although to use the Help to Buy scheme you’ll only be asked to save up and put down 5% of the value of the home you wish to purchase. The equity loan from the government then covers the 20 or 40% of the price of the home, and a Help to Buy mortgage covers the remaining 75 or 55%

Who qualifies for Help to Buy?

Anyone over 16, resident in the UK, who hasn’t owned another home in the last 3 years, and who can provide the 5% deposit and afford the monthly mortgage payments.

Am I eligible for a Help to Buy mortgage?

Providing you meet the basic criteria – over 16, UK resident, have a 5% deposit and can afford the mortgage repayments – you should be eligible for Help to Buy.

How much can the value of the house be under Help to Buy?

The property value using the Help to Buy scheme cannot be more than £600,000.

How does Help to Buy work in London?

The purchase price must still be no more than £600,000. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have at least a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price and with your 5% deposit you’ll be paying off a mortgage of just 55% of the property value.

How does selling my Help to Buy home work?

If you want to sell your Help to Buy home, you will need to repay the equity loan you received to purchase the property at the time you sell it (unless you have already chosen to repay the equity loan before this point). The amount you have to pay is based on the market value of your property at that time but is equivalent to the 20 or 40% value of the property loaned to you.

Can I buy a house with a 5% deposit?

Yes, it is possible to get a mortgage with just a 5% deposit under the Government Help to Buy scheme.

How do you pay back the Help to Buy loan?

While you have to start paying interest on the equity loan after five years, you don’t actually have to repay the loan itself until you sell up, or at the end of your mortgage term (which is after 25 years or whenever your ‘traditional’ mortgage term finishes) – whichever comes first.

Can you remortgage a Help to Buy property?

Most homeowners remortgage to get a better deal on interest rates part-way through their mortgage, or to release equity tied up in the house. For those who have bought with a Help to Buy equity loan, any equity now available in the house can be released to repay the government loan that helped buy it.

Do I have to repay the Help to Buy loan if I remortgage?

Remember, when you pay back the equity loan in full, you will need to pay the same percentage of the current property value as the percentage you originally borrowed. To repay a portion, as above, it needs to be a minimum of 10% of the property value, but you can repay it in full if you have the equity / cash to do so.

Can I remortgage without repaying my Help to Buy loan?

There are an increasing number of lenders that allow people with Help to Buy loans to use their remortgaging products. More lenders are now allowing Help to Buy users to remortgage for bigger sums than their current mortgage balance. Some even allow you to remortgage at a 95% LTV, meaning you can pay off the Help to Buy equity loan with the extra mortgage money you’re borrowing.

What’s the maximum deposit for Help to Buy?

You can purchase a property with a maximum value of £600,000. Your Help to Buy Equity Loan home must be your main residence; you cannot use the scheme for a Buy-to-Let investment. You will need a minimum 5% deposit to qualify.

Who qualifies for first time home buyers?

If you’ve never owned a home, you are considered a first-time homebuyer. But you are allowed to be a previous homeowner and still qualify as a first-time homebuyer. You must not have owned a home for at least three years prior to your Help to Buy application to qualify.

By | 2019-09-09T12:53:54+01:00 September 9th, 2019|