The Government’s First Time Buyers schemes
You have decided to go onto property ladder or you just want to live in your own home, but you are concerned about the mortgage and all the financing aspects?
Normally you will need 10% deposit and you are worrying about the monthly mortgage payment. The Government announced “Help to Buy Scheme” in April 2013. which means you will only need 5% deposit.
There are two options under ‘Help to Buy Scheme’
First one is Equity Loan and it is only available on new build properties.
With the Equity Loan you need 5% deposit but you also get the loan from the government for up to 20% of the property value.
This means you will have to take mortgage on 75% of the house value.
Equity Loan are offered with 5 years interest free period, which means after 5 years fee will start repaying your loan.
Second option is “Mortgage Guarantee”. With the ‘Mortgage Guarantee” the Government offers the guarantee to your bank and building societies to support them in giving you a 95% mortgage. It is available on all properties.
You must understand that the ‘Mortgage Guarantee” does not give you guarantee to repay your mortgage, if you cannot afford to pay.
Your Home Can Still Be Repossessed If You Don’t Keep Up With Your Mortgage Repayments.
If you decide to sell your home after few years, under the “Mortgage Guarantee” you will get the full 100% sale price but under the Equity Loan option you will get 80% of the sale price, and 20% will go to the Government.
Under “Equity Loan” you can purchase property under £600,000 in England £400,000 in Scotland and £300,000 in Wales.
The “Mortgage Guarantee” is available on property under the value of £600,000 in all of United Kingdom