How do I apply for a Help to Buy mortgage?
The Help to Buy scheme will lend you up to 20% of the value of a new build property, in addition to a mainstream mortgage. For first time buyers who are struggling to find a 10% deposit, this can release them from the rental trap.
It is available on new build properties worth up to £600,000. You need to have a minimum 5% cash deposit and be able to borrow the remaining 75% from a bank or building society.
You can repay the money at any time, but there are no fees or interest for the first five years. If you live in London, there is an upper limit for the equity loan of 20-40%.
The actual application process takes a few weeks and can be done yourself online, or by a financial adviser. The paperwork will then be forwarded to you and the solicitor acting on your behalf.
If you want to check you qualify for the scheme, there is a helpful calculator available on the government’s website: https://www.helptobuy.gov.uk/
How do I know if the property I like is covered by Help to Buy?
There are numerous providers across the country, such as Help to Buy Midlands and Orbit.
As long as the developer you want to purchase from is registered with a provider, you simply make your application to this organisation.
Normally, participation in the scheme is well advertised, but if you are unsure, you will need to raise an enquiry with the builder direct, or the estate agent managing the sale.
If the firm is not registered, it may be worth asking if they will consider membership to enable you to take advantage of the additional finance.
Will my mortgage lender mind me taking another loan against the property?
You will need to ensure you use a mortgage company that participates in the scheme.
Currently, lenders supporting Help to Buy include Barclays, Chorley Building Society, Cumbria Building Society, Leeds Building Society, Halifax, RBS, NatWest, Newbury, Santander, Woolwich, Virgin Money, HSBC, Post Office and Lloyds.
If you proceed with one of these bodies, you should have no issue topping up the borrowing with the Help to Buy loan.
How is the money made available?
Once the application is complete, your solicitor will forward the agreement for your signature, plus details about the amount you have borrowed and the terms on which it has been loaned.
Your solicitor will also need to obtain authority from the relevant Help to Buy provider to exchange contracts and subsequently complete the transaction.
The offer made to you is only valid for three months, so if your conveyancing it delayed, you may need to apply for an extension. This may, however, incur an additional fee.
Funds will be obtained from the provider by your solicitor, who will submit the appropriate documentation prior to completion.
If you are a first time buyer with a question about moving home, our residential property expert, Sarah Gaunt, would love to hear from you. Email: firstname.lastname@example.org.