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Help To Buy Questions and Answers.

You may have heard about ‘Help to Buy’ but may wonder what is it and how does it work?

Help to Buy is a government scheme to help first-time buyers get their first property with just a 5% deposit. You can borrow up to 20% of the purchase price (40% in London), interest-free for five years. You can apply to the scheme until 31 March 2023.

What age properties are available under the Help to Buy scheme?

Help to Buy is only available for new builds and regional price caps apply. In London, the scheme is available on new build homes priced up to £600,000.

How do I qualify for Help to Buy?

The general eligibility criteria for Help to Buy is as follows:

  • You must be 18 years old – or over.
  • You must be a first-time buyer, meaning that you’ve never owned a property either in the UK or abroad.
  • You will require at least a 5% deposit of the full purchase price of the property.

What upsides are there to Help to Buy?

The government loan is interest-free for the first five years. By lowering the loan to value (LTV), Help to Buy can enable you to access lenders more affordable mortgage rates. These rates typically kick in around 75% LTVs (Loan to Values), which are more attractive for lenders due to their lower exposure and therefore, lower risk.

And of course, it is a great way for first time buyers to get onto the property ladder!

Are there any downsides of Help to Buy?

After the initial five-year period, you will be charged an annual fee of 1.75% on the amount of the outstanding loan. This fee will increase each year with inflation. Your loan will become more expensive over time and must be repaid in sums of at least 10%.

What happens after 5 years with Help to Buy?

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. This fee will increase each year by RPI plus 1% You only repay the interest, not the equity.

How do I pay off Help to Buy?

By paying back the equity loan.

You can pay back part or all your equity loan at any time. Repayments are based on your equity loan percentage and the market value of your home at the time you want to make a repayment. You’ll need to get a market valuation report from a chartered surveyor when you make a repayment.

'As regulated advisers our job is to advise and recommend arrangements suited to your individual circumstances.'

How long does it take to get Help to Buy approved?

The process can take as little as 4 working days after which you’ll either be declined or you’ll get an ‘Authority to Proceed’. Once you’ve received the Authority to Proceed you can apply for a mortgage – you can’t apply until you get the authority. Remember Buckingham James are on hand to guide you through the entire process so you don’t need to worry!

Can I sell my Help to Buy property?

The Help to Buy Equity loan must be repaid after 25 years or at the same time as you sell your home. When you buy a home with Help to Buy, a second charge is placed on your property title at the Land Registry and will be paid off at the same time as the sale.

What’s next?

If you are ready to apply for a mortgage then start with getting a copy of your credit report. All mortgage lenders will need to see your credit history as a significant part of their criteria when assessing you for a mortgage.

We’ve teamed up with Check My File and you can get access to a multi-agency credit report for free today.

Just click on the link below to get your free report and then simply get in touch with Buckingham James and one of our super friendly and helpful team of advisers will guide you through the entire process!

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