Our Essential Guide To Help To Buy
Whether you’re a first time buyer or a home mover, finding the right home and securing the mortgage funding to buy it can be difficult.
So it can be good to know that there is help available.
Help to Buy comprises two different schemes that are designed to make it easier for home buyers to purchase a property.
Help to Buy (Scotland)
The first scheme is Help to Buy (Scotland), which is funded by the Scottish Government.
The second is the Mortgage Guarantee, which is part of the nationwide Help to Buy initiative launched by the UK Government in 2013.
Help to Buy (Scotland) is an equity loan scheme available to both first time buyers and those who have previously owned a home.
It can be used for the purchase of new-build properties worth up to £250,000 sold by participating home builders, in conjunction with a mortgage which must be taken out with one of 8 registered lenders.
These include major banks such as Lloyds Banking Group and Barclays, as well as smaller lenders including Glasgow Credit Union and Scot-west Credit Union.To qualify for the scheme, you need to be able to put down a deposit of at least 5 per cent of the house purchase price.
To qualify for the scheme, you need to be able to put down a deposit of at least 5 per cent of the house purchase price.
Affordability criteria apply to this scheme over and above the usual mortgage assessment checks – your monthly mortgage payments, fees and other costs must come to less than 45 per cent of your disposable income.
Under the Help to Buy (Scotland) scheme, your mortgage and deposit will make up at least 80 per cent of the property purchase price.
This is effectively topped up by a loan from the Scottish Government for between 10 and 20 per cent of the house value.
In exchange for which they have a partial equity stake in the property.
The Government’s stake in the property is repaid from the sale proceeds when the house is sold.
Alternatively, you can opt to repay the loan to reduce the Government’s equity share at any time. The minimum repayment is 5 per cent of the property’s prevailing value each year.
However you should be aware that making payments to increase your stake in the property will also involve paying any associated legal costs and valuation fees.
Mortgage Guarantee Scheme
The Mortgage Guarantee scheme, takes the form of a debt guarantee agreement between the UK Government and approved mortgage lenders.
Under it the Government supports mortgage lending of up to 95 per cent of the property value by effectively underwriting part of the loan and therefore reducing the lender’s risk exposure. The scheme is eligible against repayment mortgages taken out to purchase both new-build and older properties with a purchase price up to £600,000.