Understanding Help to Buy Mortgages ===
Help to Buy mortgages are a government scheme that aims to help people get on to the property ladder. This scheme was introduced in 2013 to help first-time buyers purchase a property with just a 5% deposit. Since then, it has been extended to include existing homeowners who are looking to move to a new home. In this article, we will explore what Help to Buy mortgages are, who is eligible for them, and how they work.
What are Help to Buy Mortgages?
A Help to Buy mortgage is a government-backed scheme that aims to help people get on to the property ladder. Under this scheme, the government offers an equity loan of up to 20% of the property’s value (40% in London) to help buyers purchase a new build property with just a 5% deposit. This equity loan is interest-free for the first five years.
The aim of this scheme is to make it easier for people to buy a property, especially for first-time buyers who may not have a large deposit saved up. The scheme is available on new-build homes up to a certain value, and there are different schemes available for those buying in England, Wales, Scotland, and Northern Ireland.
Who is Eligible for Help to Buy Mortgages?
To be eligible for a Help to Buy mortgage, you must be a first-time buyer or an existing homeowner who is looking to move to a new property. The scheme is available to those who are buying a new build property, and the property must be worth less than a certain amount.
In England, the maximum property value is £600,000, while in Wales, the maximum property value is £300,000. In Scotland, the maximum property value is £200,000, and in Northern Ireland, the maximum property value is £165,000.
How Do Help to Buy Mortgages Work?
Under the Help to Buy scheme, the government provides an equity loan of up to 20% (40% in London) of the property’s value. This loan is interest-free for the first five years. The buyer then puts down a 5% deposit, and the rest of the property’s value is covered by a mortgage.
After the first five years, the buyer will have to start paying interest on the equity loan, and after 25 years, the loan will need to be paid back in full. If the property is sold before the loan is paid back, the government will take a share of the sale price equivalent to the remaining loan amount.
In summary, Help to Buy mortgages can be a great option for those who are looking to get on to the property ladder, especially for first-time buyers. It’s important to understand the eligibility criteria and the terms of the scheme before applying for a Help to Buy mortgage. With the right information and guidance, buying a property with the Help to Buy scheme can be an affordable option for many people.