Government-backed Help to Buy schemes
Barclays supports the Government-backed Help to Buy home Ownership Schemes. There are 2 options to choose from.
- Option 1:
The Help to Buy Equity Loan is for buyers of new-build properties in England worth up to £600,000. Check out ALL the details below
- Option 2:
The Help to Buy Mortgage Guarantee helps you buy any home up to £600,000 with a minimum deposit of 5%.
Any property used as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage.
What is the Help to Buy: Equity Loan scheme?
Setting aside a big deposit for a new home can be a challenge. But with the government-backed Help to Buy scheme, customers with smaller deposits can qualify for loans on new-build homes worth up to £600,000.
Customers can put down a minimum 5% deposit, and then secure an equity loan from the Homes and Communities Agency of up to 20% of the property’s value.
How does the scheme work?
Under Help to Buy, a buyer is only required to put down a minimum 5% deposit, and the government provides an equity loan through the Homes and Communities Agency of up to 20% of the property’s value. The remaining amount is then covered through a standard mortgage.
Local HomeBuy Agents will assess and approve your purchase for Help to Buy. You’ll need their approval before you start the buying process.
At the end of the mortgage or when you sell the property, you’ll have to repay your equity loan, which will be 20% of the value at the time of sale. There is no fee applied to the equity loan for the first 5 years, after which an annual fee of 1.75% is payable, rising by RPI plus 1% each year.
Am I eligible under the scheme?
- Help to Buy is available to home-movers as well as first-time buyers
- You will need to provide a minimum 5% deposit to qualify
- It’s available on new-build properties in England only up to the value of £600,00 – please make sure that the property you want to buy is included in the Help to Buy scheme (speak to the builder or developer if you are unsure about this)
- Help to Buy is for residential purchases only – you cannot buy a home using Help to Buy and then rent it out
- There is no household annual income limit
- You must not own another property (such as a Buy to Let property)
- The scheme is only available to customers who have a Permanent Right to Reside in the UK
When will I have to repay the equity loan part of the scheme?
The equity loan part of the Help to Buy scheme is interest-free for the first 5 years. Thereafter, an annual fee of 1.75% of the value of the loan is payable, rising by RPI plus 1% each year.
The equity loan is fully repayable either at the end of the mortgage term, or when you sell your property. You can also repay the equity loan any time during the term of the mortgage.
It’s important to note that the equity loan is based on a percentage of the property’s value, and that the loan is on an interest-only basis. That means your annual equity loan payments won’t reduce the outstanding loan balances.
So if you borrow 20% of a property’s value through the equity loan scheme, you’ll have to repay 20% of the total market value of your home when you sell. For example, if you get a 20% Help to Buy loan on a £200,000 home, you'll have borrowed £40,000. If your home increases in value to £220,000 by the time you come to sell, you'll have to repay 20% of that amount – which is £44,000.
Is the scheme just for first-time buyers?
No, the scheme is available for both first-time buyers and existing homeowners who are moving home.
Help to Buy is not available to Buy-to-Let Investors or those who will own any property other than their Help to Buy property after completing their purchase.
How much can I borrow?
The amount you can borrow depends on your circumstances. You’ll need to check with a Woolwich Mortgage Advisor to make sure you can afford the mortgage.
You’re responsible for paying your mortgage under the Help to Buy scheme in exactly the same way as any other mortgage holder.
Your home may be repossessed if you don’t keep up repayments on your mortgage.
If your home is repossessed, you will be responsible for repaying any shortfall between the sale price of the property and the outstanding mortgage.