Help to Buy encompasses two schemes. The first is an equity loan, where the Government will loan up to 20% of the value of a new build home to anyone with a minimum of 5% deposit.
The equity loan scheme is interest-free for the first five years, after which there will be a charge of 1.75% (which will rise in line with the Retail Price Index) plus 1%. The loan can be repaid in full without penalty any time within 25 years or on the sale of the property.
The second, which the Government launched on the 8th October 2013, is a mortgage guarantee which will encourage mortgage lenders to lend to people with small deposits. This will be available from January 2014 and can be used to purchase new build or existing properties.
The mortgage guarantee is made to the lender by the Government and means in the event of repossession the Government will cover some of the lender’s losses.
In order to qualify, applicants must pass their lender’s credit and affordability checks and also meet appropriate criteria to ensure that they can pay back the loan.
Help to Buy cannot be used for properties in which the applicant will not be living, such as buy-to-let, nor is it open to corporate buyers.
Buying a home is one of the biggest purchases an individual can make, making good legal advice and support essential. Our Step by Step Guide to the Conveyancing Process may help explain the transaction.
Contact us today for a quote or to find out more: conveyancing@tolhurstfisher.com
ReplyDeleteIt is very informative post.
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Mortgages should be 100% and I cannot see the problem if a person has no debts and intends to live in the home at least 10 years or longer. If he have not 20% money to take initial steps then how he can apply for the load for his house.
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