publication date: Oct 8, 2013
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
Help to Buy on Existing Homes (Part Two!)
The Government says it will release information the week commencing 7th October, on the Help to Buy Scheme, and indeed more information has been given to lenders via Gov.uk,
and we even have some lenders willing to offer mortgages now, even though they can’t secure the government guarantee for the mortgage until 2nd January 2014.
So far, the scheme is only available in England. Scotland is doing new build and Wales is expected to come on board.
The way the scheme works is different to the Help to Buy Scheme
for new build properties – visit our checklist
for how this scheme works. It’s available for anyone looking to buy a property up to £600,000 – even if you already own one.
What it means as a buyer, providing you are buying a home for you and not looking to let it out, more lenders will offer 95% mortgages than are currently doing so. To help lenders, the government is ‘insuring’ up to 15% of the value of the loan to you to buy the property. If you default and are repossessed, they get this money back. Lenders are expected to be charged 1% for the insurance.
In theory, this should encourage lenders to give people with a 5% deposit better rates than currently available, but this doesn’t as yet appear to have happened.
The lenders offering the scheme from the start include RBS, NatWest, Halifax and Lloyds – spot the connection? Yes, the government, and therefore we own them!
You can apply direct to the lender for the money to buy an existing home, however, especially if you are in London or an expensive part of England, it may be worth contacting a local Help to Buy agent
so you understand all your options and don’t assume Help to Buy is the only way for you to own a property.
The mortgage is on a repayment basis only, so you start paying back the loan from day one. However, bear in mind if you are self employed or have any credit history problems, it can still be tremendously difficult to secure a mortgage. Always check with a broker under these circumstances prior to making any offers.
And don’t forget, there are lots of other schemes out there including, Shared Ownership, NewBuy on new builds and local Lend a Hand schemes.
If you are based in London and want some one to one advice from Kate Faulkner
, one of the UK’s top property experts, then visit the First Time Buyer Show
on Saturday, 19th October 2013, where she will be presenting and running a free property clinic.