ASN Mortgage Solutions Ltd

WHAT IS HELP TO BUY

As the name implies, Help to Buy is equity loan assistance available to home buyers meeting certain requirements and will be paid directly to registered house builders. The equity loan will be provided by the Homes and Communities Agency. This scheme is available in England only. You will need to contribute at least 5% of the property price as a deposit. Up to a maximum of 20% of the purchase price is available through an equity loan funded by the Government through the scheme. To reflect the current property prices in London, from February 2016, the Government increased the upper limit for the equity loan for buyers within Greater London to 40%. You will need a mortgage of up to 75% will be needed to cover the rest. An equity loan from the scheme of £480,000 (80% of the Purchase Price) based on a maximum purchase price of £600,000 is available and is interest free for the first 5 years. In the sixth year, you will be charged a fee of 1.75% of the outstanding amount of the loan, rising annually by the increase (if any) in the Retail Price Index plus 1%. These fees don’t count towards paying back the equity loan The Help to Buy scheme will not allow you to transfer / port your loan to another property. The equity loan must be repaid after 25 years or earlier if you sell your home. You must repay the same percentage of the proceeds of the sale, as the initial equity loan (i.e. as you will receive an equity loan for example, for 20% of the purchase price of your home, you must repay 20% of the proceeds of the sale.) The entitlement by the Help to Buy Agency to a share of the future sale proceeds, is secured through a second charge on your home. Details relating to early repayment of the equity loan and the implications of the property value falling, are provided on the Help to Buy website

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