Following on from the infamous UK credit crunch in 2007-08, the government needed a way to try and bring some life back to the mortgage market.
In order for them to achieve this, they set about introducing new ways to help first time buyers get onto the property ladder. They called these Help to Buy Schemes.
There are a large variety of different Help to Buy Schemes that are available out there to customers. You may find that whilst you match with some of them, you also may not match with others.
Here is a list we have compiled, summarising each of the Help to Buy Schemes and a bonus scheme we feel would be beneficial to some customers out there.
The Help to Buy Equity Loan is by a country mile, the most popular of all the schemes out there. If you are a first time buyer in Lincoln and are looking to set your mortgage process in motion, then this scheme could be just what you need.
First of all, in order to make use of this scheme, you must be a first time buyer, with the property in question being a new-build property. You will be required to have at least 5% saved for a deposit.
This scheme works in a way that allows you to use your own funds, as well as the governments, to give you access to a better deal.
You will put down your 5% deposit (or more if you have it) and then the government loan you 20% to bring the total up to a 25% deposit.
So, if you have saved up a 5% deposit, they will loan you 20%. If you have managed to save for a 10% deposit, they will loan you 15%, and so the cycle goes on.
Overall this means you’ll be left with a 75% mortgage to pay off, as well as the government equity loan. This equity loan is interest-free for 5 years.
After those first 5 years, if you haven’t paid it back, interest will build up. The interest rate for this starts at 1.75%.
As a dedicated, fast & friendly mortgage broker in Lincoln, we know that balancing your mortgage payments and the equity loan repayment alongside each other can be quite a challenge.
There are ways to combat this. An example of this would be that you can sometimes remortgage to raise capital for this loan, although this will also increase your monthly mortgage payments.
The Help to Buy Shared Ownership Scheme was brought into the mortgage world with the intention of allowing applicants to purchase a percentage of a property and then pay off the rest of the cost as monthly rent.
For the most part, the percentage of the property that is owned tends to be between 25-75%, though this can differ.
The percentage that is left over will more than likely be owned by the local housing association. If you come into more money at a later date, you can increase the percentage of which you own.
Your payments will be a combination of both your mortgage payments plus your rent. This means you are more or less paying 100% of the ground rent and service charge on your home.
Even if your share is the minimum amount, this is still the case.
The Armed Forces Help to Buy Scheme was brought forward in 2014 coming hot off the heels of the success that the Help to Buy Equity Loan Scheme had achieved.
This scheme worked in a similar way to its predecessor, though solely targets members of the Armed Forces.
If you are eligible for the criteria of this scheme, it could be quite the difference maker in your mortgage goals, especially with the government extending the scheme until December 2022.
We sincerely hope that this mortgage scheme stays around, as the Help to Buy Armed Forces Scheme is a massive help to existing members of the Armed Forces who need a boost to get onto the property ladder.
The Lifetime ISA is often a scheme left out of the conversation. It’s not everybody’s cup of tea, though it is handy to keep yourself aware of its existence, as it can help you secure your dream home as a first time buyer in Lincoln.
The Lifetime ISA is basically a fancy savings account where your money can grow free of tax. The government provides a nice little boost to your savings, giving you an extra 25%.
This means that if you are able to meet the £4,000 maximum amount, you will receive a pretty handy bonus sum of £1,000.
There is a catch of course, and it’s that you will have to pass specific criteria in order to utilise this scheme. You can find more information about this scheme on the Lifetime ISA website.