Help to buy scheme – 2014

Help to buy scheme – What is it?

If you’re a struggling first-time buyer or just trying to move up the housing ladder, there are Government mortgages schemes that may help you. A help to Buy mortgage guarantee lets you buy a newly built home or an existing property with a deposit of 5% of the purchase price. The mortgage guarantee help to buy scheme is due to start in January 2014 and to run for three years and will aim to increase the availability of mortgages for buyers with small deposits. The Government will look to provide £12 billion in guarantees, which could enable up to £130 billion in higher loan-to-value mortgages (subject to the final scheme design).

Who qualifies?

To qualify for the mortgage guarantee the mortgage will have to be:

• for a residential property, not a buy-to-let
• taken out by an individual or individuals (not a company)
• for a property worth £600,000 or less
• set up on a repayment basis (not interest-only)
• a high loan-to-value mortgage (80%-95% of the property value)

In addition, lenders will check that you can afford the mortgage and that you could continue to afford it if interest rates went up. You’ll also be subject to income checks.

The scheme will not be open to second home buyers or those with an impaired credit history (for example, if you’ve had a County Court Judgement of over £500 in past three years).

Mortgage guarantees will be available on mortgages for both first-time buyers and home movers, and on new-build and existing properties. There’s also no limit on the level of income a borrower can have.

More information to follow