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Help to Buy Mortgages FAQ
What is a Help to Buy mortgage?
A Help to Buy mortgage allows borrowers to buy a property with just a 5% deposit. There are two parts to the Help to Buy Scheme. The Help to Buy equity loan sees borrowers raise 5% deposit themselves and borrow a further 20% from the Government in an equity loan (up to 40% in London), allowing them to access mortgages at 75% loan to value (LTV) (up to 55% LTV in London). The second part is the Help to Buy mortgage guarantee. Borrowers still put down just 5% deposit however this time the government offers a guarantee to the lender for up to 15% of the mortgage. The aim of the scheme is to give more lenders the confidence to lend at higher LTVs.
Am I eligible for a Help to Buy mortgage?
Both parts of the Help to Buy scheme are available to first time buyers and existing homeowners however the equity loan element can only be used on new build houses. For both parts of the scheme the maximum property value is £600,000. The scheme cannot be used for second homes or buy to let properties. You'll also be subject to your lender's own eligibility criteria.
How can Help to Buy help me?
Help to Buy is designed to help borrowers who want to get on or move up the housing ladder but only have a small deposit.
Are there any downsides to Help to Buy?
Not all lenders offer Help to Buy mortgages and as a result your choice of mortgage will be limited. If you're using the Help to Buy equity loan (part one of the scheme) you can only buy a new build home.
Do all lenders offer Help to Buy mortgages?
No, lenders must opt in to the scheme and not all lenders have done so.
Are rates on Help to Buy mortgages higher?
That depends which part of the scheme you use. The equity loan scheme enables borrowers to access mortgages at 75% loan to value (LTV). Mortgages with a lower LTV feature more competitive rates.
The mortgage guarantee element of the scheme encourages lenders to lend at high LTVs. Traditionally mortgages at higher LTVs have higher rates.
Can I sell my house if I have a Help to Buy mortgage?
Yes you can sell your home however if you have an equity loan you will need to repay it upon the sale of your property. As this is an equity loan the government will take 20% of the property's current value.
What is the Help to Buy ISA?
The Help to Buy ISA is a savings account designed to encourage first time buyers to save for a deposit. The Government will boost savings by 25% up to a total value of £12,000 (taking your savings to £15,000 with the government's contribution).
How can I compare Help to Buy mortgages?
Know Your Money's comparison tables can help you to sort Help to Buy mortgages by rate, fees and overall cost helping you to find the best option for your circumstances.