12 August 2019

Your FAQs on Help to Buy

We know the Help to Buy scheme can seem difficult to get your head around, which is why our team have collected your most frequently asked questions around the scheme to answer in today's blog!

Keep reading to find out how you could bagsy your dream home with just a 5% deposit. 

What is the Help to Buy (Equity Loan)?

The Help to Buy Equity Loan is a government backed scheme that helps both first time buyers and existing homeowners buy a new build property. The scheme allows you to take out an equity loan of up to 20% of the full purchase price, which is interest free for the first 5 years. The buyer can put in a 5% deposit, take a mortgage out for up to 75%, then the remaining amount of 20% will come from the equity loan (subject to the buyer being eligible). The maximum purchase price for Help to Buy is £600,000 (subject to location) and must be your only residence.

How do I apply for Help to Buy?

The first step is finding your dream home, and making sure Help to Buy is offered. Rest assured, all our homes marked 'for sale' are available with Help to Buy.

Once you have found your perfect home, you will need to put down a reservation fee which will secure your home.

The next step is to fill out a Help to Buy application form. If you need any help or assistance filling this out, the Help to Buy team will be able to help you, and of course, our team are always on hand to help our customers through the process.

Once your application form is complete, you can send this to your local Help to Buy agent who will assess it and approve you within 4 working days.

Can I put down more than a 5% deposit when using the Help to Buy scheme?

Yes, a buyer can put in more than a 5% deposit when using Help to Buy meaning they can take less out as a mortgage or a smaller equity loan. The only guideline around this is that a buyer has to take out at least 25% of the Full Purchase Price as a mortgage.

Does the interest I pay after Year 5 get deducted from the overall amount I need to repay back?

The first 5 years of the loan are interest free and only in the 6th year onwards will you start paying the interest on the loan. The interest payments that you make will only be interest payments and they won’t be deducted from the total amount of the loan.

Can I still apply for Help to Buy if I have had poor credit in the past?

Yes, it all depends on whether you are able to take out a mortgage with a lender. The Help to Buy Agent doesn’t do any credit checks just an affordability check on your current situation. All the credit checks will be done with the mortgage lender.

Can you use you a guarantor when applying for Help to Buy?

No you cannot use a guarantor. The household income must only be of those living in the property.

Can I sublet/rent my property out when purchasing through Help to Buy?

Only the Ministry of Defence will be able to rent out their home. They must contact the post sales agent who are a company called Target to discuss this.

When I want to pay back the loan, do I pay back the original amount I took out?

When you come to pay off the equity loan you will need to get your property valued. The amount that you will pay back will be a percentage of the valuation price rather than the original full purchase price.

If you're keen to find out more about Help to Buy, our team are on hand to talk through your buying options all week.