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Help to Buy Mortgage Schemes

Help to Buy Mortgage Advice in Sheffield

The credit crunch put quite a lot of stress on the mortgage market leaving many home buyers and sellers in a situation where they didn’t know what to do. People just waited and waited for it to get better. Years later, the government introduced a way to try and almost reboot the market, this method was called Help to Buy.

Help to Buy consists of Help to Buy schemes, each with their own differences and ways to help people get onto the property ladder. Some schemes have stricter criteria, some are easier to access, you just need to find one that suits you best.

Help to Buy Equity Loan

The Help to Buy Equity Loan is the most popular scheme amongst First Time Buyers in Sheffield. The scheme is a great gateway into the mortgage world and could be just what you need to get the ball rolling with your mortgage application.

Help to Buy Equity Loan Mortgage Advice UK | MoneymanTV

To access the Help to Buy Equity Loan scheme, you have to be a First Time Buyer and you can only use the scheme to buy a new-build property.

This Help to Buy scheme relies on you to have a deposit of 5% or more. The deposit percentage that you have will be topped up by the government to make a total of a 25% deposit. For example, if you have a minimum of a 5% deposit, you will receive a 20% Equity Loan.

You must know that this is a loan and not a gift, it must be paid back. This loan will be interest-free for the first 5 years; if you don’t quite manage to pay it off within these 5 years, you will start receiving a 1.75% interest rate on the amount of the loan that is left. This interest rate will increase every year.

So you will have your 75% mortgage to pay for and your Equity Loan. This will be paid back monthly.

help to buy infographic

As a Mortgage Broker in Sheffield, we understand that sometimes it can be difficult to balance your mortgage payments and equity loan repayments at the same time. If you are struggling to meet your payments or you are having doubts about being able to, it may be a good idea to look into remortgaging to raise capital. Your monthly payments will increase and your term may slightly extend, however, you may end up in a slightly better position than you were before.

help to buy

Help to Buy Shared Ownership

This Help to Buy scheme was brought in to allow applicants to buy a share of a property. The way this works is that you own a percentage of a property which is usually anywhere between 25%-75%, and then you pay the rest back on rent.

Help to Buy Equity Loan Mortgage Advice UK | MoneymanTV

The remaining percentage of the property is likely to be owned by the housing association, however, you can eventually buy this percentage back further down the line if you wanted to. If you like the property and have long-term plans to stay there, you could buy the remaining share. People usually do this once they have the money and have settled in.

With the Help to Buy Shared Ownership scheme, you are essentially paying 100% of the ground rent plus the service charge on the property. No matter what percentage of the property that you own, you will still be charged 100% of the property, even with a 25% share.

shared ownership

Help to Buy Armed Forces

This scheme was introduced off the back of the Help to Buy Equity Loan scheme in 2014. Its aim was to help Armed Forces members get onto the property ladder.

Help to Buy Armed Forces Mortgage Advice UK | MoneymanTV

If you are struggling to get yourself on the property ladder and are a member of the Armed Forces, this scheme could be perfect for you. The government are reviewing the scheme in December 2022, they will decide whether or not it should continue running. As a Mortgage Broker in Sheffield, we know how much this scheme is valued and we hope that the decision is to keep it available.

armed forces help to buy

Bonus: Lifetime ISA

The Lifetime ISA is a scheme that is often slept upon and forgotten about, yet it can be a great way to get yourself on the property ladder. Yes, it’s called the Lifetime ISA, however, you can actually use it to purchase your first home. So if you are a First Time Buyer in Sheffield, you should take a look at how this scheme works and see if it’s something that appeals to you.

Lifetime ISA Mortgage Advice UK | MoneymanTV

The Lifetime ISA is basically a savings account where your money grows tax-free. As well as your savings being tax-free, the government will also top up whatever you have saved by an extra 25%. The maximum amount that you can save each year is £4,000, so if you manage to save this much, overall you will get £5,000 each year. If you save a little less, the government will still top up your savings by 25%.

Here is the criteria for the Lifetime ISA:

  • The property has to cost £450,000 or less
  • You have to buy the property at least 12 months after you access the Lifetime ISA
  • You must use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them
  • The purchase must be used for a mortgage
lifetime isa

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