The New Help to Buy scheme…

October 7th 2013
By: Melanie Hollidge

The announcement that the second part of the new Help to Buy scheme (Mortgage Guarantee) is due to be launched three months earlier than predicted is great news for buyers. David Cameron announced recently that the launch of the new scheme will be starting next week, stating that he felt is was “unfair” that people with rich parents were the only ones able to get on the mortgage ladder.
The second, new part of the scheme will enable home buyers to buy a home with a new mortgage guarantee from 80-95% of the property’s value. Unlike the first part of this scheme this part of the proposal will be aimed at old properties too. Please note that lenders will need to make suitable mortgage products available and due to the short notice of the announcement products may not be available.

So how does the new Help to Buy scheme work? These are the two main parts:
• The new part of the Help to Buy scheme (Mortgage Guarantee) will enable buyers to buy properties valued at less than £600,00 with a deposit of just 5% of the price of the property. This part of the new policy is not just aimed at new homes, and the government can guarantee up to 15% of the mortgage as an insurance policy for the banks.
• New builds (Equity Loan) – this part of the scheme was made available at the beginning of the year - borrowers with a deposit of 5% will be able to buy a house. The new scheme offers buyers 20% of the value of the new home when purchasing a new-build property of up to the value of £600,000. Borrowers will be able to access an interest free loan for five years, after which buyers must pay an annual fee of 1.75% of the loan, rising with annual inflation. A buyer can pay back this loan at any time.
Who can apply for the new scheme?
People who are not just first-time buyers are eligible to apply for this loan, with a property value up to £600,000.
The scheme is available to existing homeowners as well as first-time buyers and will not be restricted to new build homes.
Buy-to-let landlords, people trying to buy a second home, or with an adverse credit history will not meet the scheme criteria.
If you have any questions about the Help to Buy scheme then call us on 0800 4700 770 and we can provide you with access to an LSLi Ltd mortgage adviser. The adviser will be able to update you with the available lender scheme details.
LSLi Ltd charge a typical broker fee of £499 which is payable on application. The precise amount will depend on your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Goodfellows is a trading name of GFEA Ltd and is an introducer appointed representative of First Complete Ltd for purpose of the provision of advice in relation to mortgage and non-investment insurance products. Mortgage and Protection advice is provided by LSLi Ltd, an appointed representative of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority.

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