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Mortgage Advice and Help to Buy

June 2016

Andrew Mannion, mortgage adviser at RSC New Homes Ltd, answers some of the key questions on Help to Buy (England).

Who is Help to Buy intended for?

Help to Buy (England) is a government-backed equity loan scheme that assists first and second time buyers with an equity loan of up to 20% towards their purchase of a new home.

The scheme was designed to boost housebuilding and home ownership. As many lenders class the equity loan as part of the deposit, customers can benefit from extremely competitive interest rates whilst purchasing – in many cases – with just a 5% personal deposit.

What do you need in place to take advantage of the scheme?

You need to be a first time buyer or have a property sold subject to contract to be accepted on the scheme. You must not own any other property in the world.

You will also need to pass the Government’s affordability assessment for Help to Buy, which RSC New Homes will be able to assist you with.

Does it only apply to certain properties?

The Help to Buy Equity Loan scheme is available only on new build properties purchases priced up to £600,000.

What happens if you want to sell the property in the future?

If you sell the property in the future, 20% of the sale value will go to redeem the equity loan. This could be more or less than you initially borrowed under the scheme, dependent on the house value at the time of the sale.

The Help to Buy ISA has recently been launched by the Government; can you explain what it is, and why it could be useful?

Help to Buy ISA is a great new initiative which will help first time buyers save a deposit in order to purchase their new home. Once they have saved the deposit they will be able to use this scheme in conjunction with the Help to Buy Equity Loan Scheme.

In essence, the scheme is a tax friendly way to save your deposit for a new home.

The Government will boost your savings by adding 25% to whatever you save, subject to a maximum bonus of £3,000. The maximum they will allow you to save under the ISA is £200 per month. However, on day one, you can open the account with £1,000 to kick start your savings!

Will Help to Buy always be in existence, or should buyers take advantage of it now?

In theory the scheme can be withdrawn at any time, however the Government has committed to the scheme until at least 2020.