How does the Help-to-Buy scheme work?
Help to Buy is a Government scheme designed to help people to get onto the housing ladder as they provide the initial funds, up to 20% of the property value as an Equity Loan, to purchase the property. How it works:
- Deposit – You will be required to contribute a minimum deposit of 5% of the property price or more. This is significantly less than the standard deposit contribution.
- Shared equity loan – The government will provide a shared equity loan of up to 20% of the property purchase price (40% in London). You must pay back the loan after 25 years or when you sell your home – whichever comes first. The amount you pay back depends on how much your home is worth (the market value).
- Mortgage – The remaining 75% (55% in London) of the purchase price will be covered by a residential mortgage.
For example, you are interested in purchasing a property for £250,000 in Cheltenham:
- You will need to have a deposit available of at least £12,500 (and an allowance for any applicable lender fees, advice fees, solicitor fees, moving costs etc…)
- The government will provide a shared equity loan of up to £50,000
- We arrange a mortgage with an appropriate lender for £187,500