With so many new properties being built in the Tendring area at this moment and many more developments scheduled to start coming out of the ground in the next year or so we thought now would be an opportune time to explain a bit about how Help to Buy actually works.
Two important points to remember:
Firstly, it is only available on brand new homes.
Secondly, it is not just restricted to First Time Buyers.
Help to Buy is a Government driven scheme which gives financial assistance to new home buyers by reducing the deposit required down to 5% and supplying a 20% loan thus reducing the mortgage you need to just 75% of the property price. This is a fantastic benefit for those looking to buy a brand new house that you can treat like a blank canvas and turn into your very own ideal home.
However, like everything in life, whilst this seems a marvelous incentive, you need to bear in mind that there is no such thing as a free lunch! The 20% interest free Equity Loan element only lasts for the first 5 years of the mortgage after which a fee of 1.75% of the 20% will be charged rising annually by the increase (if any) of the RPI (retail price index) +1%.
Many will look to re-mortgage at the 5-year break point at which time you can ‘pay back’ the Equity Loan element. When you do pay this back (whether you have sold your home or are just looking at re-mortgaging) you will pay back not the 20% you initially borrowed, but 20% of the value of the property at that time. There are certain requirements when it comes to obtaining the valuation that are explained HERE.
Am I Eligible?
The scheme is open to both first time buyers and existing home owners*.
There is no maximum household income.
You can purchase a property with a maximum value of £600,000.
You cannot purchase an investment property (Buy to Let) using the scheme it must be for your main residence.
You will need a minimum 5% deposit to qualify.
The maximum age is 75 years of age - as this impacts the mortgage.
If you are looking to purchase a new home using the Help to Buy scheme contact Abode Mortgages Limited for professional and impartial advice on 01206 252025
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you re-mortgage.
*Existing Home Owners will have to have sold their existing property BEFORE completing the purchase under Help to Buy