New Government Help To Buy Faqs

The Government’s New Help to Buy Scheme
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Potential home movers have generated much interest in the new mortgage Guarantee phase, which is the next phase of the government’s help to buy scheme which is now launched.
This article serves to dispel common misconceptions and encourage full participation in the government’s plans…
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FAQ’s

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1. “The scheme is for new-build homes only”
Not necessarily, there is a scheme devoted to new-build properties only, namely that of the Equity Loan scheme which has been running since April. The new Mortgage Guarantee scheme is for new builds and existing properties up to £600,000.
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2. “The scheme is for first-time buyers”
Again, No. As long as the Mortgage Guarantee scheme is for a residential repayment mortgage, not a buy-to-let, the scheme is intended for any buyer.
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3. “The Help to Buy (Mortgage Guarantee) is just an extension of the Equity Loan scheme to existing properties?”
No. Phase one is the Equity Loan which is available on new build properties only and will run alongside the Mortgage Guarantee scheme. Phase two is a Mortgage Guarantee scheme. It involves a traditional repayment mortgage with a loan to value of up to 95% and is available on both new build and existing property. There is no equity loan. A buyer with a 5% deposit should ask a mortgage advisor to explore the possibility of a Help to Buy backed mortgage for the remaining 95%.
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4. “The scheme is for the whole of the UK”
Absolutely.
The scheme is available across the UK. The equity loan phase of Help to Buy is available in England and is for new-build properties only up to £600,000. Scotland has just launched a new build-only Equity Loan scheme called Help to Buy (Scotland), for properties up to £400,000. Wales has yet to formally announce an Equity Loan scheme but is expected to do so soon.
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5. “Will I be in negative equity in 5 years’ time if I take up the scheme?”
In the property market property prices fluctuate depending on various factors, particularly the balance between supply and demand. For instance due to the difficultly of buyers being able to obtain mortgages in the last five years, there has been a decrease in demand and consequent reductions in property price.
The scheme, aimed at both new and existing homeowners seeks to increase demand for property, and the supply of purchasable property will increase by existing homeowners selling up. With that in mind, the market for mortgages will function better after the 3 years for which the scheme is scheduled to last, enabling a smooth transition.
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6. “I don’t need or want a government-backed mortgage, how will this affect me?”
Many of the mortgage products for those with a deposit of 10% or more may not be assisted by the governments’ Help to Buy Scheme. However, the improved lending conditions should mean more competitive rates for those with 10% to 20% deposit benefiting all buyers, whether in the scheme or not. For those with 5% deposit this government underwritten scheme is the only real option.
To speak to a property expert please call (0116) 2999199