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.