Finding the capital for a large deposit on a mortgage can seem out of reach to many a homebuyer looking to find a foothold on the property ladder. However, thanks to a government scheme announced in The Budget 2013, you can now get a loan for 20% of the property purchase price funded by the Homes and Communities Agency (HCA).
The scheme was introduced in April 2013 and is available to home buyers, not just first-time buyers like other schemes in the past. It allows people to buy their own home, but would have otherwise struggled to obtain a mortgage because they didn’t have the money for a deposit.
How does it work?
The scheme allows you to purchase a new-build property funded by a mortgage and a loan from the HCA. You will need a minimum of a 5% deposit to qualify, the government will then lend you up to 20% of the value of the purchase price, meaning you will only need to secure a mortgage for 75% of the purchase price.
For providing the equity loan the HCA will be entitled to a share of the future sale proceeds, equal to their contribution minus what you have repaid them. For the first five years there is nothing you need to pay on the amount borrowed from the HCA. After five years there will be a fee on the equity loan of 1.75% per annum on the outstanding amount of the equity loan. After the first five years the loan fee will increase each year by the increase in RPI plus 1%. The equity loan must be repaid after 25 years.
The scheme is only available for the purchase of new-build properties at maximum purchase price of £600,000. You must check whether the house builders selling the property offer help to buy. You can find out what agents in your area provide help to buy by visiting the help to buy website. http://www.helptobuy.org.uk/
Help to buy criteria
Be approved for a capital repayment mortgage
Have a minimum of 5% deposit of the purchase price of the property
Property must be a new-build
Property purchase price must not exceed £600,000
Property purchased must be your sole residence/property
Whether you’re moving for the first time or the possibly the last time, EAD Solicitors know the stress of moving is always present no matter how many steps you have taken on the property ladder. That’s why EAD provides a comprehensive conveyancing service, so that we can make sure that your property purchase runs as smoothly as possible.
Call us on 0151 735 1000 and speak to a Liverpool solicitor from our residential conveyancing team and get a free no obligation conveyancing quote.
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