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Help to Buy Scheme

publication date: Aug 19, 2013
author/source: Kate Faulkner

Help to Buy a Property 

This is a new Government scheme introduced by the Treasury which subsidises the cost of buying a home in England. It was announced in March 2013 and is being introduced in
two phases. 

Help to Buy will subsidise a deposit of up to 20% on your property purchase.

Phase One: Help to Buy - New Build

This is available to anyone buying a new build property up to the value of £600,000. The scheme was launched in April 2013. It isn’t available on all new builds, a developer has to apply for their properties to be able run the scheme. Most medium and large developers are already participating in the scheme, but not all mortgage lenders will support your purchase with a mortgage. 

House XXX

Examples of Help to Buy mortgage lenders include Nationwide, Santander, Halifax, Leeds Building Society, Bank of Scotland, Lloyds, Natwest and Wololwich Building Society. Mortgage rates vary from
3 to 3.5%, but do your homework carefully as you may be charged a fee for a 
lower interest rate.

When you purchase a new build, you pay at least a 5% deposit, the lender the remainder, and the Homes and Communities Agency pays the balance agreed to the developer on your behalf. 

To apply for Help to Buy funding and find out if you are eligible, you need to visit a
Help to Buy agent.

Phase Two: Help to Buy - ‘second hand’ or ‘lived in homes’

This scheme is expected to be launched in January 2014, although it’s not guaranteed so far as there is quite a lot of opposition to the scheme. The full details of how the scheme will actually work have yet to be given. 

In principle, the lender will decide if you are eligible for the scheme and as with a new build, you will fund the purchase via a 5% or more deposit. The lender will fund the rest, and the government will insure them against up to 15% of the money lent. So if your property is repossessed, the lenders losses are reduced.  XXX  House

How long does Help to Buy support last? 

The scheme is accessible for three years from April 2013. Effectively the government gives you a ‘free loan’ for a five year period. After this period you can either re-mortgage or you can pay interest on the government loan. This will be charged at 1.75% of the loan's value. 

Is Help to Buy right for me? 

From a new build perspective this is easy - speak to a Help to Buy Agent and they will advise if you are eligible for Help to Buy any of the other schemes such as Shared Ownership,
First Buy and shared equity

Ideally it’s for people who are trapped in their existing property due to negative equity or the property’s value hasn’t increased and they need to move but can’t save a big enough deposit. 

It’s also for first time buyers who can afford the running costs of a mortgage and home, but not the huge deposits required in some parts of England.

More information can be found at Help to Buy 

For help on how to investigate or apply for the Help to Buy Scheme, sign up FOR FREE, for our Help to Buy Checklist

Contact your local Help to Buy Agent

Read the government guidelines on Help to Buy Scheme (bear in mind though it’s 21 pages!) 

See all of our other checklists which you will have FREE access to by becoming a member of 

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All our information is brought to you by Kate Faulkner, author of Which? Property books and one of the UK's top property experts.
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