Help to Buy

Help to Buy Is it for you?

What is Help to Buy? Help to Buy is a Government initiative to help people buy their first home or, if they are struggling with their deposit, existing homeowners. There are two options, a mortgage guarantee for any type of property and an equity loan for new build only.

Who runs the Help to Buy scheme?

The Homes & Communities Agency (HCA) on behalf of the Government.

Why is the mortgage guarantee useful?

Because although you may be taking out a 95% mortgage, with the Government guaranteeing up to 15% of that mortgage it increases the number of mortgage products available to ensure a more competitive interest rate.

If I take out an equity loan how much do I pay back when I sell? /Ĩ LJŽƵ ƚĂŬĞ ŽƵƚ ĂŶ ĞƋƵŝƚLJ ůŽĂŶ ŽĨ ϮϬй ŽĨ ƚŚĞ ƉƵƌĐŚĂƐĞ ƉƌŝĐĞ͕ LJŽƵ͛ll pay back 20% of the sale price. In other words if property prices rise, the Government will get 20% of any increase in value. But if prices fall, the Government would take 20% of any reduction.

What are the costs of the equity loan?

If you repay the equity loan within 5 years there are no costs. After that you will be charged 1.75% of the equity loan and in the following years that will rise by the increase in the Retail Price Index (RPI) plus 1%.

Can I pay back part of the loan to increase my equity in the property if for example I get a better job? zĞƐ͕ ƚŚŝƐ ŝƐ ĐĂůůĞĚ ͚ƐƚĂŝƌĐĂƐŝŶŐ͛͘ WĂLJŵĞŶƚƐ ĐĂŶ ďĞ ŵĂĚĞ Ăƚ ĂŶLJ ƚŝŵĞ ďƵƚ ŵƵƐƚ ďĞ Ă ŵŝŶŝŵƵŵ ŽĨ ϭϬй ŽĨ ĐƵƌƌĞŶƚ ŵĂƌŬĞƚ value.

Both schemes seem such a good deal, can I buy a second property as a holiday home?

No. The property purchased must be your own residence.

What if it was abroad though? zŽƵ ŵƵƐƚŶ͛ƚ ŽǁŶ ĂŶLJ ŽƚŚĞƌ ƉƌŽƉĞƌƚLJ ĂŶLJǁŚĞƌĞ ŝŶ ƚŚĞ ǁŽƌůĚ͘

Can I buy a property for my son or daughter to rent from me?

EŽ͕ LJŽƵ ĐĂŶ͛ƚ ůĞƚ ƚŚĞ ƉƌŽƉĞƌƚLJ ƚŽ ĂŶLJŽŶĞ ĞůƐĞ͘

&Žƌ Ă ĨƌĞĞ ,ĞůƉ ƚŽ ƵLJ ŵŽƌƚŐĂŐĞ ĂƐƐĞƐƐŵĞŶƚ Žƌ ũƵƐƚ Ă ĐŚĂƚ ŝĨ LJŽƵ ĂƌĞŶ͛ƚ sure if Help to Buy is right for you, call Flagstone Financial on 0800 3899986.

This material is issued by Beresfords Group Ltd of which Flagstone Financial Management Limited is a wholly owned subsidiary. Beresfords Group Ltd is not permitted to provide regulated mortgage and insurance advice, this is provided by Flagstone Financial Management Ltd. Copyright Beresfords Group Ltd 2014

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