7 Help to Buy Mortgage Options

There are certain things about a Help to Buy mortgage that are a given. You know, like having a large enough deposit for the property you’re after and the fact that you’ll be shelling out for a lot of fees along the way. Although, there are some things that are a little less certain. You know, like the options if you live in London or if you’re currently living in social housing, for instance.

What Help to Buy mortgage schemes are available?

There are many helpful Help to Buy mortgage schemes out there. Some of which you may be aware of, some of which may be a new option or direction for you. We highlight 7 Help to Buy options that could be right for you:  

#1 Help to Buy ISA

 Despite the Help to Buy ISA not being a mortgage product, it is a sound way of generating extra cash towards your first home. Essentially, it’s a savings account for first time buyers which has a generous interest rate (2-3%) and cash bonuses which are completely tax free. There’s even more good news in that fact you can open one anytime until the end of 2019! For further information on help to buy ISAs click here.  

#2 Help to Buy Equity Loan

 Available until 2021 and designed with the ambition of getting more people on the property ladder by offering 5% deposits on new build properties, the government will front 20% of the property price, to reduce your mortgage amount. You will be expected to start paying interest on this loan after the first 5 years. Then you’ll need to pay back the remaining percentage at the end of your mortgage term, unless you start chipping away at it during the length of your agreement.  

#3 Help to Buy London

 London has its own rules adapted for the excessive house prices and property market in general. Again, a government lead initiative to help Londoners get onto the property ladder. Similar to the help to buy equity loan, a 5% deposit is acceptable on any new build property, in Greater London, costing up to £600,000. The difference being that, in this case, the government are willing to lend you up to 40% of the property value, in order to reduce your costs.  

#4 Help to Buy Armed Forces

 This scheme is designed for anyone serving in the armed forces (as long as you’ve completed the minimum length of service and have at least 6 months left to serve). It’s different from a civilian help to buy scheme because it’s not as complex. Simply, you can borrow up to 50% of your salary to help with raising a deposit and other costs involved with buying a home. The maximum loan amount is £25,000 and an it’s interest free repayment scheme over 10 years. You can speak to your chain of command or go online through the joint personnel administration system to find out more.  

#5 Help to Buy Shared Ownership

 The shared ownership scheme was created to allow non-homeowners to get on the property ladder by purchasing a percentage of the mortgage and renting the rest. As long as you earn £80,000 or less (£90,000 in London) and have a deposit to cover 10% of the share you’re wanting to buy. The idea is that monthly repayments are less and more affordable with a smaller mortgage, of which you can buy additional portions of over time based on the value of the property at that time. For instance, you buy a home worth £100,000 on a shared ownership mortgage, and opt for a £30% share (70% still owned by the housing association) would mean:

  • Housing association share = £70,000
  • Your share = £30,000
  • Your deposit = £3,000
  • Mortgage required = £27,000

You’ll pay your monthly mortgage rate plus a subsidised rent on the share you don’t own, which is often a lot less than the market value. Your UK location will have an impact on the type of shared ownership mortgage you can acquire, so make sure you do some research beforehand.  

#6 Help to Buy Starter Homes

 As long as you're under the age of 40 and are a first time buyer and like new build properties, this scheme could be an option for you. Starter homes are sold at 80% of the market value, providing an instant discount. If you know of any new build developments in your area, register your interest to receive updates and when the time is right you could get 20% discount. The catch being that you can not sell or let out the property for at least 15 years.  

#7 Help to Buy Social HomeBuy

 If you’ve lived in social housing for 5 or more years, you could be entitled to own a share of your property, as long as your landlord is a member of the Social HomeBuy Scheme. You must buy a minimum share of 25% of your property to get discounts of anywhere between £8,000 and £16,000 depending on the size, location and percentage of your home you invest in. Then, similar to a shared ownership mortgage, you pay a subsidised rent on the remaining value. There are other parameters to consider with this scheme and we would recommend speaking to an expert.  

Find the right Help to Buy Mortgage with MortgageKey

Here at MortgageKey, we understand and appreciate that the options available can become confusing. That’s why we have experienced industry experts on hand Monday to Friday 9am to 8pm to provide free, impartial advice. If you have any questions about a Help to Buy mortgage, please get in touch.

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