Share to Buy Expert Sessions: Your questions about Help to Buy

The government provides a loan of up to 20% of the home (or 40% in Greater London), so the purchaser only needs to raise a 5% deposit, with a 75% mortgage (or 55% in Greater London) making up the rest. Find out more about Help to Buy here.

However, if you’re buying in the capital, the maximum loan you can receive is 40%. With London Help to Buy, you will still need to raise a 5% deposit but with a 55% mortgage making up the rest.

Response from JLL – Yes, the loan is up to 20% and 40% respectively, however you don’t have to take it all.

However, as the equity loan counts towards your deposit, you may be able to take out a mortgage where you might otherwise struggle; this also means that you don’t have to take out a costly 95% mortgage. You can see a further breakdown of the Help to Buy costs here.

You can find out more about Help to Buy and the eligibility criteria here.

You can find more about the Help to Buy Equity Loan here.

Response from L&Q – No. Help to Buy is designed to assist you to move up the housing ladder and must be your only residence. This means you will be expected to sell your current home (in the UK or abroad) if moving up the ladder.

The disposal of your current home will be verified by your solicitor/conveyancer before you can proceed to exchange contracts on the Help to Buy Home.

In addition you cannot be linked to another property financially. For the avoidance of doubt, married couples own assets jointly and therefore if one owns a property the other is directly linked to the asset and treated as a home owner also.

Response from L&Q – Yes, as long as you are approved through an accredited mortgage provider.

For more information about the two schemes, visit our Shared Ownership vs Help to Buy page.

No – Help to Buy and Shared Ownership are two different home-buying schemes that can’t be used in conjunction with one another. For more information about the two schemes and how they differ, visit our Shared Ownership vs Help to Buy page. 

Response from JLL – No as they are two separate schemes. You can choose to use either Help to Buy or Shared Ownership.

For more information about the two schemes and how they differ, visit our Shared Ownership vs Help to Buy page.

Response from JLL – No, there should be no difference in build standard.

Find out more about the Help to Buy equity loan here.

Find out more about London Help to Buy here.

Response from JLL – All London boroughs are eligible for Help to Buy, however not all developers use Help to Buy. If you would like to find out more, we would recommend that you speak to one of the JLL sales team to advise you on the various developments we have available London-wide.

Find out more about London Help to Buy here.

Response from JLL – Yes you can have a lodger such as a friend or a family member. However, you must remember that the financial burden to pay back the equity loan will fall back to you. Please also check your contract with the developer.

Response from JLL – This is very much development dependent. Please check with the developer and in your contract.

Response from Censeo Financial – In year six you will pay 1.75% of the equity loan amount, split equally between the 12 months of the year. After that the figure will increase by RPI +1%.

So on a £240,000 equity loan – which is the maximum you can be given in London – the payment in year six will be £350. In year seven, if the RPI is 3%, then the payment would go up by 4% and would be £364.

Find out more about the costs of buying a Help to Buy home here.

Response from Censeo Financial – No. You do not need to take a mortgage on a Help to Buy property, as long as you can pay the rest with your deposit. If you can get a mortgage then it may be better for you to take a lower equity loan. However, you will need to speak with an adviser in order to work out which option is best for you.

Response from L&Q – No, the only difference is the way the lenders calculate affordability. For Help to Buy, they will take into account the interest payable for the equity loan after year five to make sure this will be affordable for you.

Response from JLL – The is a personal decision and very much depends on your current financial position, including savings and any debt you may have. We would recommend that you speak to a financial advisor to discuss your options.

Response from Censeo Financial – If you are eligible and you have the affordability, then there is no difference in difficulty between obtaining a mortgage on a Shared Ownership home or a Help to Buy property.

For more information about the two schemes and how they differ, visit our Shared Ownership vs Help to Buy page. 

Response from JLL – The equity loan is interest free and from the government. The mortgage is from the lender (bank) and interest will be payable from month one.

Find you more about the Help to Buy equity loan here.

Response from JLL – Yes, however we would recommend you speak to a specialist Help to Buy lawyer for further advice.

Find out more about the Help to Buy eligibility criteria here.

Response from Censeo Financial – It will depend on the size of those loans and credit cards, because they will come into play in terms of working out affordability. However, it will not completely rule you out.

Response from JLL – Yes, however this will be developer and development dependant.

Response from JLL – You will pay full Stamp Duty on the purchase price of the property, however there is Stamp Duty relief for first time buyers. This means first time buyers will save up to £5,000 as for properties costing up to £500,000, you will pay no Stamp Duty on the first £300,000. You will pay Stamp Duty on the remaining amount, up to £200,000.

Response from JLL – Yes, there is an interest rate against the loan. On the sixth year you will be charged at 1.75% against the amount owed.

Response from L&Q – The interest you pay will depend on the mortgage product interest rate that you secure on your property; the Help to Buy Equity Loan is interest free for the first five years. Speaking to an independent mortgage advisor will help you understand the expected interest rates you will pay.

Response from JLL – Yes, you would begin to pay back the equity loan on the sixth year. Please note that the loan will increase by 1% plus Retail Price Index (RPI).

Find out more about Help to Buy repayments here.

Response from JLL – The loan can be paid back in full or in instalments of minimum of 10% payments. Just bear in mind the costs involved if you are going to pay back in multiple instalments as there will legal and valuation costs associated. For further information we recommend you speak to a financial advisor.

Find out more about Help to Buy repayments here.

Response from L&Q – The Help to Buy scheme allows you to repay all or part of your equity loan. A partial repayment is often called ‘staircasing’. Staircasing payments can be made at any time and must be a minimum of 10% of your home’s prevailing market value – whether that value is different than when originally purchased. You may wish to check any additional criteria with your current lender.

An independent valuer must provide a valuation of your property and you will also be responsible for the associated administrative cost. Enquiries about administrative costs should be made to Homes England’s Mortgage Administrator.

If you extend your mortgage to fund your partial repayment of the Homes England equity loan, your mortgage repayments will probably increase to reflect the fact that you have repaid some of the equity loan. Homes England’s Mortgage Administrator will need to approve any increase in your first charge mortgage. Your solicitor/conveyancer will be able to provide more illustrations when they advise you on your purchase.

Response from JLL – Yes it is possible to pay back the loan sooner. This can be done in a minimum of 10% instalments. Just bear in mind the costs involved if you are going to pay back in multiple instalments as there will legal and valuation costs associated. For further information, we recommend you speak to a financial advisor.

You’ll need to obtain an independent valuation prior to sale to determine the amount to be repaid. You can find out more about selling a Help to Buy home here.

Response from L&Q – You can either sell privately or through an estate agent. You may also consider other options such as Assisted Move and Part Exchange.

Response from JLL – When you decide to move and sell your property, you will need to pay back your 40% Government loan. Your equity loan will rise and fall in the market. Therefore if your house increases, so will the amount you owe.

Response from JLL – You will need to be in the process of selling your Help to Buy property and paying your loan back to government. To confirm, you must also live in your Help to Buy home whilst you own it, and therefore can’t rent it out in the interim. For further advise we would recommend you speak to a Help to Buy lawyer.

You can find out more about selling a Help to Buy home here.

Response from JLL – No, this is not the case. New build property just like any other property will move in price with market conditions. If you would like to find out more, we would recommend that you speak to a JLL agent on London growth hotspots and developments that we have available.

Response from JLL – Typically Help to Buy apartments are leasehold. You can find out more about leasehold homes here.

Response from JLL – There will be two key changes to the Help to Buy scheme. Firstly, you must be a first time buyer. Secondly, there will be regional price caps outside of London.

Response from L&Q – Properties due for completion after March 30th 2021 will be governed under the new Help to Buy regulations that take affect from April 1st 2021. It is not when the property is reserved that Help to Buy consider but the anticipated build completion of the property.