Help to Buy

The Government has created the Help to Buy scheme. This helps people take steps to buy their own home. Whether you want to get onto the housing ladder or move up it, Help to Buy makes it possible to buy a new-build or existing home priced up to £600,000 with as little as a 5% deposit.

Help to Buy

The Government has created the Help to Buy scheme. This helps people to take steps to buy their own home. Whether you want to get onto the housing ladder or move up it, Help to Buy makes it possible to buy a new-build or existing home priced up to £600,000 with as little as a 5% deposit.

Help to Buy - Shared Equity Scheme

With a Help to Buy equity loan the Government lends you up to 20% of the cost of your new build home. You will need a minimum of a 5% deposit and a 75% mortgage to make up the rest.

You will not be charged loan fees on the 20% loan for the first five years of owning your home. From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI inflation plus 1%.

The scheme is only available on new-build properties from a participating, registered builder. You must meet the Help to Buy affordability requirements as well as the lender's affordability criteria.

These loans are not available for Buy To Let landlords, second home owners or shared ownership properties.

If the home in the example above sold for £210,000, you’d get £168,000 (80%, from your mortgage and the cash deposit) and you’d pay back £42,000 on the loan (20%). You’d need to pay off your mortgage with your share of the money.

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Help to Buy - Shared Equity Scheme - London

Reflecting the property prices in London, from 1st February 2016 the Government increased the upper limit for the equity loan from 20% to 40% for new home buyers within Greater London.

With London Help to Buy you’ll need to contribute at least 5% of the property price as a deposit, the Government will give you a loan for up to 40% of the price and you’ll need a mortgage of up to 55% to cover the rest.

Example: Equity Loan of 40% on property value of £400,000

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Help to Buy - ISA

If you are saving to buy your first home, save money into a Help to Buy ISA and the government will boost your savings by 25%. So, for every £200 you save, you will receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

How long will Help to Buy ISA's be available for?

You’ll be able to open a Help to Buy ISA until 30 November 2019. After that date they won’t be available to new savers anymore – but if you opened your Help to Buy ISA before then you can keep saving into your account until 30 November 2029 when accounts will close to additional contributions.

You must claim your bonus by 1 December 2030.

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Lifetime ISA

 

You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA.

You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

You can hold cash or stocks and shares in your Lifetime ISA, or have a combination of both.

When you turn 50, you will not be able to pay into your Lifetime ISA or earn the 25% bonus. Your account will stay open and your savings will still earn interest or investment returns.

Buying your first home

You can use your savings to help you buy your first home if all the following apply:

  • the property costs £450,000 or less
  • you buy the property at least 12 months after you open the Lifetime ISA
  • you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them
  • you’re buying with a mortgage

Buying with someone else

If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too.

They’ll pay a 25% withdrawal charge to use their Lifetime ISA savings if they own or have a legal interest in property (for example they’re a beneficiary of a trust that includes property).

If you have a Lifetime ISA and a Help to Buy ISA, you can only use the government bonus from one of them to buy your first home.

You can transfer money from a Help to Buy ISA to a Lifetime ISA. If you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay the 25% withdrawal charge.