If you’re looking to buy a house & can’t put together the biggest deposit in the world, then the Government Help to Buy Scheme is pretty much perfect for you!
To put it simply, it’s just a loan from the Government to help you buy your first house, or one of those shiny new builds if you already own a house.
For any house under £600,000 you can borrow up to 20% and up to 40% in London. You just need to get together a 5% deposit for the house you want to buy. Which is much better then trying to win the lottery and put down a 25% to 40% deposit.
The great thing about the Help to Buy Loan is that it is interest-free for the first 5 years!
How Help to Buy Works in a Nutshell
- You get together a 5% deposit for the new-build or house you want to buy
- The Government lends you up to 40% of the house price depending on where you live. 20% for most people, 40% for people looking to buy a house in London.
- You find a mortgage to borrow the rest of the money to buy the house
- You’ve got 25 years to pay back the Help to Buy Loan
- If you sell your house you’ve got to pay back the same percentage of the original Help to Buy Loan. This means that if you’ve taken a loan for 40% and then sell your house after a few years, you’ll have to give the Government back 40% of the sale.
How Much Interest Do You Have To Pay After 5 Years?
With the Help to Buy Scheme you get 5 years of paying no interest on the money you borrowed. But nothing great lasts forever, on year 6 you will be charged 1.75% interest on the money you’ve borrowed. Then it gets even more expensive, the interest you pay rises to match inflation plus 1% each year.
How to Apply for a Help to Buy Loan?
It’s easy to just speak to your local Help to Buy Agent.