In October 2013 the Government introduced a new Help to Buy scheme to enable first time buyers to get onto the housing ladder and existing home owners to move up the housing ladder with as little as a 5% deposit.
There are two ways in which the government help to do this.
The Mortgage Guarantee Scheme
The application and repayment process is the same as it would be for standard transactions. The scheme is intended to increase the availability of mortgages to buyers with a small deposit by the government guaranteeing to meet mortgage repayments to the lender. This is dealt with directly between the mortgage lender and the government and is available on UK properties up to the value of £600,000 to first time buyers and existing home owners.
The Equity Loan scheme
This is a government loan of up to 20% of the cost of a new build property up to £600,000. You only need a 5% deposit and a 75% mortgage.
There won’t be any loan fees for the first 5 years of owning the property, but you will be charged 1.75% of the value of the loan in the sixth year, increasing by the retail price index + 1% every year after that.
The loan will be payable when you sell your property or at the end of the mortgage period, whichever is first.
If you would like advice on Residential Property matters please contact us for more information.