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4 October 2016

You could be closer to saving your deposit than you think.

Help to Buy: Equity Loan and Help to Buy: Mortgage Guarantee make it possible to buy a home with just a 5% deposit

Equity Loan Scheme –

How does it work?

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 With a Help to Buy: Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.

You won’t be charged loan fees on the 20% loan for the first five years of owning your home.

Help to Buy is equity loan assistance to home buyers from the Homes and Communities Agency (HCA). Help to Buy makes new build homes available to all home buyers (not just first time buyers) who wish to buy a new home, but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage. Up to a maximum of 20% in England and up to 40% in London, of the purchase price is available to the buyer through an equity loan funded by the Government through the HCA. Help to Buy is available in England from house builders registered to offer the scheme. Help to Buy has been available since 2013. In November 2015, Government announced an extension of the initiative up to 2021 (it may close earlier if all of the funding is taken up before 2021).

 

 

Help to Buy: Equity Loan scheme Example

-See more at: Help to Buy

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

For more information (including advice on fees and paying back your loan) please download our Help to Buy Buyers’ Guide (PDF).

 

Example: for a home with a £200,000 price tag

 

Mortgage Guarantee Scheme –

How does it work?

A mortgage supported by the Help to Buy: mortgage guarantee scheme works in exactly the same way as any other mortgage except that under the scheme the Government offers lenders the option to purchase a guarantee on mortgage loans.

Because of this support, lenders taking part are able to offer home buyers more high loan-to-value mortgages (80-95%).

You will still be fully responsible for your mortgage repayments. So if you have a 5% deposit, you will need to take out and pay back a 95% mortgage.

Whilst there is a deadline for the Mortgage Guarantee Scheme, Estateology believes we can get you on the property ladder before the deadline 31/12/2016.

Example: for a home with a £200,000 price tag

How it works - mortgage guarantee

– See more at: Help to Buy

We are here to take you through the process as smoothly as possible. Call us now to discuss your options further on 0203 4222 333

The property purchased 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. You cannot rent out your existing home and buy a second home through Help to Buy.

If you’d like to know more, or if you want to apply, please contact your Local Help to Buy Agent by clicking here> Estateology .