In a bid to kick-start the property market, the Government launched various schemes. In any case, this started after the credit crunch of the mid-2000s. Most of the schemes launched were under the banner of “Help to Buy”. They got designed to get people into the property ladder. Putting all the schemes under the title of Help to Buy did cause some confusion, so here we explain how they all work.
The Help to Buy Equity Loan was probably the most popular of the schemes launched. You can only use this loan when you buy a new build property. It is not available on pre-owned homes. You put down a 5% deposit on the house and then borrow up to 20% from the Government.
The loan is interest-free for five years. Remember it is a loan, not a gift, so you have to pay it back. Ideally, you would want to start saving up towards this as soon as you complete it. It may be possible to remortgage your home in 5 years to raise capital for this too. If you do not repay the loan after five years of fees, start to apply, and they go up each year.
The Government participates in any increase or decrease in the value of the property. Therefore the possibility that you have to pay back much more than the original amount.
If you are in the Armed Forces, then you may be able to borrow towards the deposit at 0% via the Forces Help to Buy. You would repay the loan each month from your salary. In any case, this is an excellent scheme as you don’t pay back any more than the amount you borrowed.