Many people believe that the Help to Buy scheme only applies to newly built homes. This limits a home buyers chance to utilise the scheme as they may not want a new home or the new home might not be available in the area they want to buy. Fortunately, it is now possible to make use of the scheme through Help to Buy mortgage guarantees. This provides more opportunity for home buyers. So how do Help to Buy mortgage guarantees work?
Help to Buy mortgage guarantees present home buyers with the chance to buy a property with as a little as a 5 % deposit of the asking price. The scheme doesn’t just apply to first-time buyers – home movers can take advantage too. Help to Buy mortgage guarantees help people take their first or next step on the property ladder.
The reason Help to Buy mortgage guarantees appeal to lenders is the 15% loan guarantee from the government. This give lenders peace of mind to commit to a mortgage without worrying about missed payments and other issues. However, there is an eligibility criteria to follow for anyone interested in Help to Buy mortgage guarantees:
• There is a minimum deposit of £5,000
• The purchase price must be £600,000 or less
• The maximum loan available is £400,000
• The Help to Buy mortgage must be taken out on a capital repayment basis with a maximum term of 25 years
• The home you are looking to buy must be the only property you own, your main residence and must not be rented out after you buy it
• The property must be in the UK
• The mortgage cannot be for a shared equity, right to buy or shared ownership
• Help to Buy mortgage guarantees are not available for new build properties.
(source: HSBC bank)
Another advantage of Help to Buy Mortgage guarantees is that you don’t have to be a first time buyer and there is no limit to the level of your income.
Help to Buy mortgage guarantees don’t work for everyone but they are a great way of purchasing property. An alternative option would be Help to Buy Equity Loans, which can be used with all Inspired Homes new build properties. You can find out more here.