There are two main Help to Buy Schemes in the UK at the moment; an Equity Loan and a Mortgage Guarantee. A Help To Buy Equity Loan is for people that wish to buy a new build property that they wouldn't otherwise be able to afford in their area due to not having a sufficient income and/or deposit to secure the level of mortgage needed. A Help to Buy Mortgage Guarantee is a scheme for people that have an existing good credit records and can basically afford to purchase the property outright. This means that deposits put down can be as low as 5% with the support from the government scheme. The lenders, because of this, allows people to take out a more high-loan-to-value mortgage.
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Am I Eligible?
Browning Rose will assess you, your long term goals and situation to decide which help to buy scheme might be suitable for you. There are a few restrictions on these schemes, and considering these schemes are for first time buyers, the process can be quite daunting and confusing. Browning Rose help establish what scheme is right for you and the steps to take to qualify, always making sure you are in the know and breaking everything down, jargon-free. We can explain and walk you through right to the end, whilst using our expertise to make sure you are getting the best deal possible.
An Example of the Equity Loan Help to Buy Scheme
You wanted to purchase a home for £200,000. You would put down a 5% cash deposit, which would be £10,000. The Government would then put in 20% towards your loan, which would be £40,000. You would then be left with a 75% mortgage from the lender, which would be£150,000. If you come to sell the house, and it goes up in price to £250,000, creating £50,000 ‘profit’, you would get £200,000 (£150,000 from the mortgage, £10,000 from cash deposit and £40,000 as 80% share of the ‘profit’) You would then pay back £50,000 to the government (the original 20% borrowed at £40,000 plus 20% share of the profit at £10,000). If there was anything outstanding on the mortgage, you would have to pay it back from your share.
An Example of the Mortgage Guarantee Help to Buy Scheme
You wanted to purchase a home for £200,000. You would put down a 5% cash deposit, which would be £10,000. You would then be left with a 95% mortgage from the lender, which would be£150,000. However, the next £30,000 would be Lender covered by the Government guarantee. If you come to sell the house, and it goes up in price to £250,000, creating £50,000 ‘profit’, you would get all £250,000, without having to pay anything back to the government. The benefit of this scheme is that you would own the property fully, therefore you would accrue any appreciation on it and repay as you would with any other mortgage.
Whichever scheme you choose to go with, Browning Rose makes the whole process straightforward and easy for you, so you can focus on the important things.
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