Help To Buy
Your property may be repossessed if you do not keep up repayments on your mortgage
Help to Buy Equity Loan
Who: First-time buyers and home movers with a 5% deposit
Property: New build only with a value of up to £600,000 from a developer who supports Help to Buy
How does it work: The government lend up to 20% towards the deposit (or 40% in London) and you put up a minimum of 5% from your own funds. A mortgage would then make up the rest.
There is a monthly management fee of £1 from the start of loan until repaid. After 5 years an interest fee becomes payabl;e, which may rise annually. The loan has to be repaid after 25 years or the sale of the house if earlier.
The total amount repayable by you will be the proportion of the market value of your home that was funded by this loan, plus interest and charges. The amount you will have to repay under the loan agreement will depend on the market value of your home when you repay.
Help to Buy Shared Ownership
(Sometimes referred to as Part Buy / Part Rent)
Who: First-time buyers and home movers who are deemed eligible by the Help to Buy authority (see here for basic criteria)
Property: Qualifying new build or shared ownership resale
How does it work: The scheme allows you to buy a share in a property of between 25% and 75% of the purchase price, the remaining part is owned by a housing association who rent their share to you. You need a minimum of 5% of the value of the share you are buying as a deposit. A mortgage would be needed for the remaining amount owed on your share.
Typically, you can purchase additional shares of the property at a later date when you become able to do so; this is done in chunks of 5% and would be based on the market value of the property at that point. You are not obliged to buy additional shares.
Help to Buy ISA
Who: First Time buyers who are a UK resident, over the age of 16, with a valid National Insurance Number
Property: Any, up to the value of £250,000 or in London up to £450,000
How does it work: The government will give you a 25% bonus based on what you have saved in your ISA when you cash it in to buy your first home. There is a limit of £200 per month that can be saved, with an additional £1000 alllowed in the first month., This means that after 3 months you could have £1,600 saved which would be topped up by £400 from the government.
You only receive the bonus when you buy your first home, not if you use the money for something else or if you buy above the maximum property value. To be eligable for the bonus you need to have a minimum of £1,600 saved and the bonus is capped at £3,000 (£12,000 savings). If you are buying your home jointly with someone else then you could both be eligible and could double your state funded reward.
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