A simple guide to the. Help to Buy Equity Loan

Transcription

1 A simple guide to the Help to Buy Equity Loan

2 A simple guide to buying your new home through Help to Buy Equity Loan Help To Buy Equity Loan is the new home ownership scheme aimed at helping working people to buy a home. It offers eligible buyers a 20% equity loan from the government s Homes and Communities Agency (HCA), resulting in lower mortgage payments and lower deposit requirements. Whether you re a first time buyer or an existing home owner looking to move house if you need help to step either on or further up the property ladder this scheme could be for you. Help to Buy helped us get back on to the property ladder. Without it we d still be renting. What is an equity loan? An equity loan allows you to borrow a percentage of the total value (equity) of your chosen home. The lender (in this case the HCA) shares in any rise (or fall) in the value of the property over the course of the loan. When you sell your home, the loan is repaid in full. call:

3 How does it work? With Help to Buy Equity Loan, the buyer purchases a home at a newbuild development with assistance from the HCA in the form of an equity loan. The loan enables a buyer to borrow up to 20% of the market value of their chosen home. The buyer is required to put down a deposit of just 5%. The loan is interest-free for five years. From the beginning of year six, a fee of 1.75% of the equity loan is payable. This rises annually by the RPI (inflation) plus 1%. Who can take advantage of Help to Buy - Equity Loan? Help to Buy is open to all buyers who can afford to buy a new-build home. Buyers must be able to fund up to 80% of their selected property through a conventional mortgage with a minimum 5% deposit. Buyers must take out a mortgage with a qualifying lender. The maximum purchase price is 600,000 The home purchased must be your only residence. Help to Buy is not available to assist buy-to-let investors or those who will own any other property after completing their purchase You cannot rent out your existing home and buy a second home through Help to Buy.

4 An example The home you want is on the market for 200,000 5% 75% 20% Your deposit of 10,000 Equity loan of 40,000 How do I get started? Buying a home through Help to Buy - Equity Loan couldn t be easier, all you need to do is: Find a home from a registered developer Fill in a property information form (you can download one from our website or ask your developer) and reservation paperwork Submit both forms to Plumlife (the developer may do this for you) Providing we re satisfied with the information provided, we ll issue an Authority to Proceed (ATP): NOTE - please do not apply for a mortgage prior to receiving this document Plumlife will then oversee/administer the whole buying process on your behalf, liaising with solicitors, lenders, buyers, the developer, etc. You ll be kept in the loop throughout What kind of homes are available to buy? Help to Buy homes are available from registered house builders in England. There are a huge range of really desirable new homes available. Help to Buy homes in Greater Manchester, Lancashire or South Yorkshire are listed on the Plumlife website. Your total mortgage would be 150,000 What happens if property values fall? If the value of your home falls, the equity loan depreciates also. Whatever figure you sell your home for whether it has decreased or increased you repay the loan based on the original percentage borrowed.

5 What s the role of the Help to Buy Agent? The local Help to Buy Agent acts on behalf of the HCA to help buyers to understand and access Help to Buy schemes in their area. They carry out credit/ affordability checks on applicants to ensure their purchase is affordable. They will oversee the entire buying process from start to finish including the issuing of approvals to your solicitor and the house builder. Plumlife is the Help to Buy Agent for Greater Manchester, Lancashire and South Yorkshire. call: