What is Help-To-Buy?

The UK Government has recently launched a Housing scheme to allow people with the inability to save for 20% deposit to purchase a house. The Scheme requires a 5% deposit.

Do I qualify?

  • A deposit of at least 5%
  • Your home is worth less than £600,000
  • Purchase the property where you live most of the time
  • Do not intend to let out the property

The Scheme is split into two parts – Help to Buy Mortgage Guarantees, and Help to Buy Equity Loans. Please click the link to find out more.

Mortgage Guarantees

Help-To-Buy has been taken up by most of the UK’s largest mortgage lenders:

  • A deposit of at least 5% has to be put down on the property
  • Up to 95% of the value of the property is borrowed from the lender
  • The UK Government will then guarantee any mortgage borrowing above 80% of the property value.
  • Do not intend to let out the property

Mortgage Guarantees Example

So, for example, a possible scenario is the buyer taking out an 85% mortgage, with the Government guaranteeing 10% of its value should you not be able to pay the mortgage and default. (What this means in reality is that you are still liable for the mortgage, but the Government will guarantee a proportion of the mortgage to the lender.)

Also, the Government is allowing lenders to set their own interest rates, so it could be a potentially more expensive option depending on the lender. On the flip side, if you have a small deposit it can be your only option to get onto the property ladder.

helptobuy

Equity Loans

This is available for home-buyers wanting to purchase New Property. Structured Acquisitions have a number of new build properties available and as such would qualify for this Scheme.

  • The Government will lend up to 20% of the property value as a loan
  • A 5% Deposit is required
  • A 75% mortgage will be required of the property value
  • Do not intend to let out the property

Equity Loans Example

Let’s say you wanted to buy a home for £200,000. This would be broken down into:

  • A £40,000 loan from the Government (Government Equity in the property)
  • A 10,000 deposit put down by you
  • £150,000 from the mortgage lender
  • Do not intend to let out the property

The benefit of this Scheme is that lenders are more likely to offer better Interest rates (having been given a larger deposit)

To find out more about any of the Schemes and how they affect your Structured Acquisitions property investment, please contact us.