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When looking at the Help To Buy Scheme some people might not be aware that it is actually open to both first time buyers as well as existing home owners. Also there are two options available to both types of buyers.

 

OPTION 1: The Equity Loan

This option, as the name suggests is exactly that, it is a loan from the government of up to 20% of the value of the home you are looking to purchase. This option is only available on New Build properties up to a value of £600,000 and you must not own any other property at the time you purchase your new home on the scheme.

So the way this option works on an example property worth £200,000 is as follows:

  • The buyer supplies £10,000 deposit (5% of the value)
  • The government loans £40,000 (20% of the value)
  • The buyer gets a mortgage of £150,000 (75% of the value)

Say the buyer then sells the property for £210,000, they would get £168,000 (80%, from the mortgage and the deposit) and they would pay back £42,000 on the loan (20%). The mortgage would need to be paid off from the owners’ share of the money.

With this option there are also fee’s applicable on the loan, which would come into force after the 5th year of ownership. Please see the link for more information - Equity Loan buyers guide

OPTION 2: The Mortgage Guarantee

This works in exactly the same way as any other mortgage except that under the scheme the Government offers lenders the option to purchase a guarantee on mortgage loans.

Because of this support, lenders taking part are able to offer home buyers more high-loan-to-value mortgages (80-95%).

An example on £200,000 property would be:

  • The buyer provides the £10,000 deposit
  • The lender provides a mortgage of £190,000 (95% mortgage)
  • The government covers £30,000 of the £190,000 mortgage

This is still an option available to both first time buyers and existing home owners and is available on new build properties as well as none new build properties.

The qualifying criteria is:

  • The property you are purchasing can be priced up to £600,000
  • You must not own any other property anywhere in the world at the time you buy using this scheme
  • Your mortgage must be a repayment one, not interest only. Offset and guarantor mortgages are also excluded from the scheme
  • The property cannot be let out to someone else
  • The mortgage cannot be taken out by a company
  • You cannot use the mortgage guarantee scheme with any other Government scheme such as Help to Buy: equity loan or shared ownership. Your deposit for the property can’t come from a government scheme either
  • The size of the mortgage you apply for must be less than 4.5 times your income.

 

For further information, including frequently asked questions and answers as well as a list of the lenders involved with the Mortgage Guarantee scheme why not visit www.helptobuy.org.uk

Today sees the launch of OnTheMarket, a brand new portal to rival the likes of Rightmove (RM) and Zoopla. Why is this a good thing? Many years ago Rightmove was established to bring agents together and list properties in one central location. For years agents displayed their logos in marketing materials and office windows, and for the most part agents were happy. Ever since it was floated on the stock market the pricing has doubled year on year, with no increase in spending to justify it. The sole reason for this was to increase the share value and dividends. However, estate agents became wise to this, the customer service from the portal offering nothing more than put up or shut up in its response to any questioning. This has now lead to an average of £1000+vat being spent per office, solely on RM. This represents a significant cost to the smaller independent companies, whereas the large nationals, most of whom are major shareholders, paid nothing. 

OnTheMarket

In 2014 the development of an industry owned portal began, with the sole purpose of taking some control back. Whilst some were, and still are sceptical of the portal, the majority have sided in favour of it and as such has resulted in its launch today. By taking some control back it means that vendors and landlords will not be hit by increasing costs from estate agents just to cover the portal pricing increases. This will have a knock-on effect to tenants and buyers too. 

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