Overview: Help to Buy Scheme – Mortgage Guarantee
What does the Scheme do?
To allow buyers to purchase any property under £600,000 – a new build or pre-owned home with as little as a 5% deposit.
How Can it Benefit Buyers?
The scheme is intended to increase the availability of mortgages at competitive interest rates for buyers with a minimum of 5% deposit. Previous to this scheme there were very few lenders who offered 5% deposit mortgages. Those that did typically had high interest rates. The mortgage guarantee scheme means that mortgages will now be more readily available to buyers with improved interest rates and there will be no additional paperwork or charges to the buyer though there will be inflexible criteria that buyers must meet in order to qualify.
How Does It Work?
This scheme is made possible as it is backed by the government who are guaranteeing repayment of the mortgage to the lender, removing the risk to lenders. This part of the process will be dealt with behind the scenes by participating lenders and will not have any impact on buyers.
The scheme is available to existing home owners and first-time buyers and the application process is the same as a standard mortgage. You apply for the mortgage and if all the conditions in the checklist below are met than you are eligible for the mortgage. The standard terms and conditions regarding repayments will apply as in any mortgage.
- A minimum of 5% deposit required
- Eligible buyers must not own any other property
- It can only be used for properties in the UK for residential use
- Mortgage applications need to be through a participating lender
- Buyers post-tax income/any existing loans must meet with the required criteria
How Do I Find Out More?
For more information please view the link below or speak to a mortgage broker.