Help to Buy Scheme:

How does Help to Buy work?

There are two ways you can benefit from the Help to Buy scheme:
Equity loans where the government lends first-time buyers and existing homeowners’ money to buy a newly-built home.

Mortgage guarantee where the government promises your lender that it will cover part of any losses they might sustain as a result of the mortgage not being repaid. This is available for new and old properties across the UK and will close to new loans on 31 December 2016.

Who can’t apply for the scheme?

You can’t use the above schemes to buy a second home or a property to rent out. If you use this government scheme, you can only take out a repayment mortgage.

Help to Buy: Equity loans

How they work

You need at least 5% of the sale price of your new-build flat or house as a deposit.
The government lends you up to 20% of the sale price.
You borrow the rest (up to 75%) from a mortgage lender, on a repayment basis.

Help to Buy: Mortgage guarantees

How they work

These are government-backed mortgages.
The aim is that the guarantee will encourage the lender to give you a mortgage which only requires a small deposit.

Mortgage guarantees are for:

People living in England, Wales, Scotland and Northern Ireland.
Buyers with a deposit of at least 5% of the purchase price.
First-time buyers and existing homeowners who are moving.
New or old properties selling for up to £600,000.

They are not for:

Second homes
Properties you intend to rent out
Anyone who is using or going to use another home buying scheme
How do I get a mortgage guarantee?
Most major lenders offer mortgages under the Help to Buy guarantee scheme.

Be aware that the lender will check you can afford mortgage repayments. You’re still responsible for making repayments backed by a mortgage guarantee in exactly the same way as as any other mortgage.

You can read more about this on the governments website here: www.helptobuy.gov.uk