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Help to Buy Mortgages

Equity Loan

Help to Buy - Equity loans are available to first time buyers as well as homeowners looking to move. Here are some handy hints and tips to see if The Equity Loan Scheme could be for you.

  • The home you want to buy must be newly built with a price tag of up to £600,000. With a Help to Buy: 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. This is explained in the diagram below:
  • The scheme is available on New Build homes in England up to the value of £600,000.
  • No annual household income limit.
  • You will only need to secure up to a 75% mortgage with a commercial lender.
  • You need to be able to afford and sustain the mortgage payments on your chosen property. We will check this when we receive your application.
  • Current home owners are able to apply for an Equity Loan however they must sell their current home.
  • For the first five years the loan is interest free, but from year six onwards you have to pay monthly fees which start at 1.75% and then increase every year by inflation +1%. These fees do not count towards what you owe on the equity loan so it’s important to factor in this additional cost when weighing up whether shared equity is right for you.

Shared Ownership

Help to Buy - Shared Ownership is a fantastic opportunity for those who want to get a foot on the property ladder but can’t afford to buy a home on the open market. It allows you to buy a share in a brand new leasehold property (either a house or an apartment) on a part buy/part rent basis and pay a subsidised rent on the part that you do not own.

It is not just new properties that are available to buy under Shared Ownership. From time to time, properties that were originally sold under Shared Ownership become available for resale.

To qualify for Help to Buy Shared Ownership, you will need to meet the following criteria:

  • You can’t afford to buy a home on the open market
  • You have a household income of less than £80,000 per year.
  • You are a first time buyer.
  • You are at least 18 years of age.

You buy a share of between 25% and 75% in a new home then pay a subsidised rent, usually to a Housing Association, for the remaining share.

The share you buy is worked out by the Registered Provider (usually a Housing Association) according to what you can afford. The bigger the share you buy, the less rent you have to pay.

You will need to be able to raise a mortgage for the share you want to purchase unless you have sufficient savings to buy your share outright.

Help to Buy Shared Ownership is great if you have limited savings, as you only need a deposit for the share you're buying and if you buy a small share, you'll only have a small mortgage.

There will also be other costs to consider when you are purchasing a home which could include mortgage fees, valuation fees, solicitor fees, Stamp Duty Land Tax and moving costs.

Here at SN Financial we have over 30 years combined experience in the mortgage industry and have advisers on hand to guide you through the mortgage process.

Need help or advice with your finances?

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