On the back of the credit crunch, the government introduced a new way to give First Time Buyers more confidence in the mortgage market, this scheme is known as Help to Buy. In fact, there are multiple Help to Buy schemes available, the two most popular being the Help to Buy Equity Loan and Help to Buy Shared Ownership.
Help to Buy mortgages are only available to First Time Buyers planning to buy a newly built property. Also, no matter what, you will always need a 5% deposit to put down on your new build. Your deposit can be increased if you want; you’ll often find that the more deposit that you put down the greater chances you have of being accepted for a mortgage.
The Help to Buy shared ownership scheme allows you to buy a percentage of your property (usually between 25%-75%) and then pay the rest back on rent. So if you had a 5% deposit and took out a 45% mortgage, both you and the government would own half of the property and that’s why you would still have to pay rent to live there.
You should know that this percentage that you own can be increased at a future date if you want to so that you own more of the property. As a Mortgage Broker in London, we often see Help to Buy applicants choosing to raise this percentage once they have settled in or perhaps are making more money.
Once you have your deposit at the ready and have found a new build that you want to make an offer on, it’s time to get your Help to Buy mortgage application rolling. Say you had a minimum of a 5% deposit, the government would loan you an extra 20% in order to make a 25% overall deposit. As long as your total deposit is 25% it doesn’t matter if you put more deposit down, for example, you can put down a 15% deposit and the government would then loan you an extra 10%.
So you have a 25% deposit for your new build, which means that your mortgage is only 75%. However, you can’t forget about the percentage that the government gave to you as it is a loan and not a gift, it will need to be paid back. For the first 5 years, this loan will be interest-free, but if you don’t manage to pay it off within the 5 years, you will start receiving interest on it, usually starting at 1.75%.
Having a Mortgage Advisor in London by your side could prove extremely beneficial to your Help to Buy journey. A Mortgage Broker in London like us, specialise in Help to Buy mortgages and will talk you through all of the Help to Buy schemes and explain how they work. We will also assess your personal and financial situation and to see if you qualify for any of the Help to Buy schemes. We have helped 1000’s of Help to Buy applicants obtain amazing Help to Buy mortgage deals and we want you to be next.
The Help to Buy Equity Loan is only available on newly built properties up to the value of £600,000 and you can only access the scheme as a First Time Buyer in London. You must know that you can’t own any other property at the time you purchase your new home. Also, subletting and part-exchange is not allowed.
Example: for a home with a £200,000 price tag:
Whatever the percentage that the government loaned you, this is secured as equity within your property. Therefore if your property price increased, so would the amount to pay back on the government’s equity loan. On the contrary, if your property price were to decrease then so would the total to pay back on the loan.
If the home in the example above sold for £200,000, you’d get £160,000 (80%, from your mortgage and the cash deposit) and you’d pay back £40,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.
If you are still wanting more Help to Buy Mortgage Advice in London, we highly recommend in speaking to your Mortgage Broker in London – Londonmoneyman. We will explain the Help to Buy process from start to finish, check if you qualify for any schemes and try to find you a competitive deal to go with your Help to Buy mortgage. We also offer a free Help to Buy mortgage consultation, so make sure that you get in touch and give us a call today.
For more information (including advice on fees and paying back your loan) please download the Help to Buy Buyers’ Guide (PDF).
Our Mortgage Advisors in London will always go above and beyond for you and will recommend you with your best option for your individual circumstances. Our friendly team will make sure that you feel happy and secure through the whole Help to Buy mortgage process.
Here are some of the most common Help to Buy mortgage situations that we come across at our Mortgage Broker in London:
Find out more helpful information about the Help to Buy schemes available to you at Gov.uk
As a Mortgage Broker in London, we assist clients with all types of mortgages, including those looking at starting their Help to Buy journey. As soon as you get in touch with us, we will walk you through the whole process, from start to finish. We want you to feel comfortable and secure with everything that is going on at all times, that’s why will tell you what is happening 100% of the time.
If a new home has caught your eye that fits the criteria for a Help to Buy mortgage, we will go through the paperwork with you and even liaise with the home builder or estate agent on your behalf. We can talk you through the rest of the process once you get in touch.
As part of your free Help to Buy mortgage consultation, we will go through all of the figures with you so that you know exactly how much you will be paying each month. We are experts in reducing customers monthly expenditures, it is our job after all!
As your Mortgage Advisor in London, we are here to help you. Get in touch with us today and make a date for your free mortgage consultation.
Your free initial mortgage consultation in London will last roughly one hour. Your dedicated mortgage advisor in London will then recommend a mortgage for you, with no obligation for you to proceed. At this point, it is up to you to decide whether or not you wish to proceed with the recommended mortgage.
If you choose us as your Mortgage Broker in London, then our process will work as the following; One of our Mortgage Advisors in London will carry out a Fact Find to determine your, needs before recommending the most suitable mortgage available for you. A credit check will then be required for an Agreement In Principle. Once all the relevant documentation has been gathered and the valuation of the property has been undertaken, a formal mortgage offer can be issued.
In order for you to ensure you are prepared as early as possible, our Mortgage Advisors in London recommend that you obtain an Agreement in Principle prior to viewing properties in London. At the very latest you should obtain a Mortgage Agreement in Principle before you make any offers, in order to help with your bargaining position.
An Agreement in Principle will normally last somewhere in the range of 30 and 90 days. This depends on the Lender that is being used. If your Agreement in Principle expires, your advisor can always refresh this for you.
If you are looking to achieve something like debt consolidation or home improvements, you may be able to get a second mortgage. The option for a second mortgage can also be used on a second property if you are looking at using it for yourself, a family member, a holiday home or a Buy to Let.
Obtaining a mortgage if you have had previous credit problems isn’t completely impossible, but you may face certain hurdles, such as some lenders requiring that you put down a higher deposit than usual, perhaps 15% of the property purchase price.
You are able to get a mortgage once you have submitted at least one year’s accounts. The majority of Lenders use your salary plus dividend to calculate the maximum amount you can borrow, whereas others may use your net profit.
Three payslips are generally what is required for an employee to prove their income and if you are Self-Employed, it’s usually the latest 2 years’ accounts. You will also need to produce some proof of ID, your address and the latest 3 months’ bank statements.
If you take up a free initial mortgage consultation with one of our trusted Mortgage Advisors in London, your appointment will last around an hour. Your advisor will be able to turn round an agreement in principle within 24 hours, with a formal mortgage offer taking roughly about three weeks on average.
For your deposit, you will be required to put down a minimum of 5% of the sale price of a new build property in London. Once you have done this, the Government will loan you up to 20% of the properties value.
Give us a call and a Mortgage Advisor in London will recommend the best Help to Buy scheme based on personal circumstances.
Enjoy finding your dream home in London
Make an offer on the property and once accepted, we will progress your mortgage application.
We will be here to answer all of your mortgage questions right through till you get your keys.
A telephone call where we can take some initial details and find out about your plan of action.
Enjoy finding a property!
Make an offer on the property you set your heart on – we’ll finalise your figures and help you to get a good deal.
Our mortgage recommendation. We’ll try to find you the best mortgage deal. We’ll be there to support you, right through to you getting your keys.
