Help to Buy
Help to buy is an Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
Who is eligible?
Equity loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a price tag of up to £600,000.
You won’t be able to sublet this home or enter a part exchange deal on your old home. You must not own any other property at the time you buy your new home with a Help to Buy: Equity Loan.
Easy to apply?
The Help to Buy Equity Loan scheme is run by Government-appointed Help to Buy agents such as local estate agents. They will guide you through your purchase.
Things to consider before you secured the house..
- Re-mortgage – how easy is it to buy back your remaining share?
- Can you sell without purchasing the missing share?
If you want to re-mortgage, you will possibly require the Developer Lender consent. There are certain requirements that must be met for your request to be considered:
- The mortgage term with the new lender
- The new mortgage must be no more than the existing loan with the main lender mortgage.
Another way of paying for the equity loan is to staircase. There are two ways you can do this:
- Staircasing without another loan being secured on your property
- Staircasing by securing another loan on your property
Redemption is the full repayment of your equity loan. There are two ways you can redeem your loan:
- Repaying your loan when selling your property
- Repaying your loan without selling your property
Can I buy with an interest-only main mortgage?
No. Your main lender’s mortgage must be a repayment loan with interest and capital repaid every month. This ensures you make the Help to Buy purchase on a sound basis and protects the tax payers’ investment in your home.
Will I have to pay Stamp Duty?
The Government’s standard rules and procedures for Stamp Duty Land Tax (SDLT) apply to all Help to Buy purchases.
SDLT is payable at the time of purchase, on the full purchase price of the home. That is, the amount paid by you (the first mortgage and any cash contribution) plus the value of the Help to Buy loan.
There is no further SDLT to pay on any ‘staircasing’ repayments or repayment when the home is sold.
You should budget for SDLT on the full open market price of the property when you purchase a Help to Buy home.
How long will it take before I can move in?
Because Help to Buy: equity loan homes are generally on new developments (and may still be under construction), in common with most new home sales, you will normally be expected to arrange a mortgage and exchange contracts within one month of paying your reservation fee.
Can I sublet my Help to Buy home?
No. Help to Buy is designed to assist you to move on to or up the housing ladder. If you wish to sublet, you will first have to repay the Help to Buy:
Can I extend or alter the property?
Not without permission. Because Help to Buy is designed to help people move on to or up the housing ladder, you should consider repaying part or all of the Homes and Communities Agency’s contribution before making plans for improvements or alterations.
Can I get help with benefits to pay the Help to Buy fees if, for example, I lose my job?
Because Help to Buy fees are not classified as rent, they do not qualify for Housing Benefit. You should make sure you have made arrangements to ensure you can continue to make your Help to Buy payments if your income stops. You should seek independent financial advice about this before purchasing a Help to Buy home.
What happens if my partner moves out and no longer wants to be party to the equity loan agreement?
The Post Sales Help to Buy Agent will be able to arrange for a ‘Deed of Release’ which will release your partner from the obligation of having to repay the equity loan. Assuming that your first charge mortgage lender is content for this to take place and that you are able to provide evidence that you can meet your housing costs and still have a reasonable standard of living, permission should be a formality.