Help to Buy Mortgage Equity Loans
Help to Buy Mortgage is a method of buying a property with the help of the Government. The concept is to make home ownership more affordable and also further UK building.
The Help to Buy Mortgage equity loan is just that ‘additional borrowing’ to finance the deposit. Backed by the Government repayments are not normally required until 5 years has past so until then the overall repayments of home ownership should be lower than if you took out a larger mortgage with a bank or building society.
The standard Help to Buy Mortgage scheme advances up to 20% as an equity loan but there are variants such as Help to Buy London which offers 40%.
Not all Mortgage Lenders accept Help to Buy and they will all insist on a minimum of 5% deposit from your own resources.
The scheme is restricted to new build developments and for sole property ownership.
Help to Buy Mortgage example:
Property value £100,000
Purchasing 80% share i.e £80,000
Deposit £5,000 (minimum 5%)
Mortgage £75,000 (75%)
Help to Buy Equity Loan £20,000 (20%)
Help to Buy Mortgage Loan basics:
- Purchase for first and subsequent time buyers.
- Available on your choice of property.
- The property must be your only one.
- The maximum purchase price is £600,000.
- The minimum deposit from your own resources is 5%.
- The Government may contribute a deposit up to 40% (depending on the scheme).
- The mortgage has to be on a repayment basis.
- The maximum combined household income is £150,000.
- It cannot be used in conjunction with a shared ownership or shared equity purchase.
- Credit issues can be considered.
There are lenders that will allow you to remortgage.
Please be warned it is likely the developers will try and persuade you to use their own Mortgage Advisor. We would always recommend you consider independent advice.
For more information on our range of Help to Buy Mortgage scheme products please complete our Online enquiry form or call us on T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.