Help to Buy Mortgage Scheme For First Time Buyers Guarantee
What is ‘Help to Buy’?
Help to Buy is a government scheme where mortgage lenders or builders are offered various incentives. These then assist in house buyers purchasing a property. There are various help to buy schemes. However, the two main ones are ‘Help to Buy Mortgage Guarantee’ and ‘New Buy’.
What is the ‘Help to Buy Mortgage Guarantee’?
Unlike the limited ‘New Buy’ scheme (restricted to new houses or first time buyers), the ‘Help to Buy Mortgage Guarantee’ is for everyone and all property types. That is, providing you qualify for a mortgage. However, not all lenders participate in these schemes. Also, there are big differences in the mortgage interest rates on these typically high loans to value (LTV).
How much deposit is required?
Principally a minimum 5% deposit is required by the applicant. The remaining loan (up to 20%) is guaranteed by the government. This is not dissimilar from ‘Mortgage Indemnity Guarantee’ (MIG) or ‘Higher Lending Charge’ (HLA) in the past. These were insurance policies on high loan to value mortgages, charged by the mortgage lenders and paid by its customers. Usually, this was added to the mortgage advance.
When did the scheme start?
The scheme started in January 2014. However, the government had opened the scheme three months earlier, allowing applicants to be ready to complete in January 2014.
‘Help to Buy Mortgage Guarantee’ is available for:
- New and existing properties owned to values of £600,000
- 80% to 95% loan to value mortgages
- New and existing home owners
The scheme is ONLY available for:
- Repayment mortgage
- Full income variation mortgages
- Good credit history applicants
The scheme is scheduled to run for 3 years and reviewed every September by the Bank of England.