How does Help to Buy work?

12th March 2020

Help to Buy is an equity loan scheme provided by the government to help first-time buyers and existing homeowners get into a brand-new home in a more affordable way and just a 5% deposit.

The conditions are that the new-build property must be less than £600,000, your only property and you cannot rent it out to tenants. You can borrow 20% of the purchase price (40% in London) and make up the rest of the price through your deposit and a repayment mortgage. The loan will be interest free for the first five years as long as your deposit is at least 5% of the purchase price. In year six, you’ll be charged 1.75% and, after that, fees will rise by inflation linked to the Retail Prices Index (RPI) plus 1% each year.

The government’s equity loan element must be repaid after 25 years – earlier if you sell your home in that time. When you sell your home, you must repay the same percentage of the proceeds of sale as you borrowed, for example, if you borrowed 20% as your equity loan, you’ll repay 20% of the proceeds of your sale.

If you’d like to know more about Help to Buy or have found a new-build home that you need a mortgage for, talk to our expert team of mortgage advisers and we’ll guide you through the process. Call us on 08454 500200 or click here to make an enquiry.

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Steph and Cara made our mortgage experience stress free and we cant thank them enough. From the first phone call through to the mortgage being approved we received first class customer service. Everything was explained in detail and we were updated each step of the way. They took what could have been a very stressful experience and made it a walk in the park. We will definitely use Charters again in the future. Thank you!

C O'Rourke

June 2020

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