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Help to Buy FAQ's

Q. What is H2B?

A. H2B stands for Help to Buy and is the general term used to cover the various initiatives aimed at assisting people in buying a property.

Q. What is the H2B Equity Loan scheme?

A. The Help to Buy Equity Loan scheme is an initiative to assist people in buying new homes through the Homes and Communities Agency (HCA). The Help to Buy Equity Loan scheme makes new build homes available to all home buyers (not just first time buyers) who wish to buy a new home, but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage.

Q. Who is eligible?

A. The property being purchased must be the applicant’s main residence and therefore can’t be a second home or a Buy to Let property. The applicant isn’t permitted to own another, or hold an interest in another property at the time of purchase. The maximum purchase price is £600,000 for England and £300,000 for Wales.

It is only available on new build properties in England, Scotland and Wales. Properties which have been previously occupied either by an owner occupier or a tenant before sale may not be purchased with Help to Buy assistance.

The Help to Buy Equity Loan scheme is open to both first time buyers and existing home owners. There is no maximum household income.

Properties which are subject to a Section 106 or Section 75 agreement are not eligible.

Q. What if I have previously owned a home?

A. It is fine to have previously owned and sold a property. Your application is based on your current housing situation.

Q. I live in Scotland or Wales, am I eligible?

A. This scheme is available in England only. Scotland and Wales have their own versions of this scheme

Q. What is the maximum amount of loan I can receive under the H2B Equity Loan scheme?

A. Up to a maximum of 20% in England and up to 40% in London, of the purchase price is available to the buyer through an equity loan funded by the Government through the HCA. The maximum amount you can borrow from Help to Buy in England is £120,000 and up to £240,000 for London. There is no minimum amount.

Q. How much deposit is required from the Buyer?

A. Buyers must provide a deposit of a minimum of 5% of the full purchase price of the home bought under this scheme.

Q. What happens with the 20% Equity Loan after the first five years?

A. The equity loan is interest free for the first five years. After that, you will pay a fee of 1.75%, rising annually by the increase (if any) of the Retail Price Index (RPI) + 1%.

Q. How much will I pay back?

A. After five years you will be required to pay an interest fee of 1.75% of the amount of your Help to Buy shared equity loan at the time you purchased your property, rising each year after that by the increase (if any) in the Retail Prices Index (RPI) plus 1%.

The loan itself is repayable after 25 years or on the sale of the property if earlier.

Q. Are there any additional charges?

A. You must pay a monthly management fee of £1 per month from the start of the loan until it is repaid.

Q. What is the total amount repayable?

A. The total amount repayable by you will be the proportion of the market value of your home that was funded by this loan, plus interest and charges. The amount you will have to repay under the loan agreement will depend on the market value of your home when you repay the Help to Buy equity loan and the rate of inflation in the meantime.

Q. Can I pay off the Equity Loan before the end of the first five years?

A. Yes, following the purchase you can choose at any time to make voluntary part repayments or a full repayment, based on the market value at that time. The minimum voluntary repayment is 10% of the market value at that time.

If you purchased a home using the Help to Buy Equity Loan, you can get advice about selling and redeeming your equity loan at MyFirstHome (previously known as Housing Options Plus).

Q. Are there any restrictions?

A. You won’t be able to sublet your property (which has been part funded by the Help to Buy initiative) or enter a part exchange deal on your old home. You must not own any other property at the time you buy your new home with a Help to Buy Equity Loan.

Q. What Builder Incentives are acceptable?

A. Builder Deposits are not accepted; the deposit must come from the applicant’s own resources or a gift from family/friends. Other builder sales incentives are permitted, so long as they do not exceed 5% of the property value.

The scheme prohibits a builder taking a buyers existing property in part-exchange for the new one.

Q. How do I apply for a Help to Buy Equity Loan?

A. The Help to Buy Equity Loan scheme is run by Government-appointed agents who are appointed by the Government’s Homes and Communities Agency (HCA). They can guide you through your purchase, from providing general information about the scheme to dealing with your application.

Your local Help to Buy agent can guide you through the options available and explain the eligibility and affordability criteria. They have the authority to give the go-ahead for you to purchase a home with help from the equity loan scheme. The agents make other key decisions during the purchase process.

To find an agent you could look out for the Help to Buy logo on new-build developments and ask about the scheme there.

Q. What is a Help to Buy Agent?

A. The Help to Buy Equity Loan scheme is run by Government-appointed agents who are appointed by the Government’s Homes and Communities Agency (HCA). They can guide you through your purchase, from providing general information about the scheme to dealing with your application.

A. Help to Buy Agents are housing associations appointed by the Homes & Communities Agency as a one stop shop and point of contact for people looking for affordable homes to buy or rent in their area.

For example, bpha is the Help to Buy Agent for the East and South East of England, covering Buckinghamshire, Bedfordshire, Hertfordshire, Essex, Cambridgeshire, Norfolk, Suffolk, Surrey, West Sussex, East Sussex and Kent.

If you live outside of these areas, you can find details of the Help to Buy Agent for your area by going to the Government Help To Buy website.

Q. I have found a property I am eligible – what do I do next?

A. Once you have found a suitable new-build property with a participating, registered builder – you will need to complete a Property Information Form and Reservation Form with the builder.

Both forms will then need to be submitted to an appointed Help To Buy Agent.

The agent will then issue you an Authority to Proceed (ATP) document. You should not apply for a mortgage until you have received this. The ATP will also advise you of the next steps.

Q. Can AscentiaUK help me to arrange a Help to Buy Equity loan?

A. Unfortunately not as we are not an appointed HCA agent.

Q. What is HCA?

A. HCA is the Homes and Communities Agency – they are the Government department which administers the Help to Buy Equity scheme.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

Help to Buy Mortgage Guarantee FAQ’s

Q. What is the Mortgage Guarantee scheme?

A. The Help to Buy mortgage guarantee scheme helps home buyers with good credit records who can afford to purchase the property outright with a deposit as low as 5%.

These include First Time Buyers, trying to get onto the property ladder, and ‘second-movers’, needing to move up the ladder to a bigger home. These loans are not available for buy-to-let landlords or second home owners or for a shared ownership purchase.

Q. Who is eligible for a Mortgage Guarantee scheme – and for what types of property?

A. Existing home owners and first time buyers are eligible to participate. Buyers must have a minimum deposit of 5% of the purchase price and must be arranging their mortgage through a participating lender.

The initiative is available across the UK on newly built or ‘second hand’ homes up to a value £600,000.

The property being purchased must be a residential property, where you plan to live and it must not be rented out or sub let.

It must be your only property, so you cannot have an interest in any other property, anywhere in the world

Q. How does the Mortgage Guarantee scheme work?

A. The scheme works by offering lenders the option to purchase a guarantee from the government on mortgages where a borrower has a deposit of between 5% and 20%.

The guarantee offers lenders an ‘indemnity’ or insurance cover, which will compensate them for most of any loss they may suffer if the borrower defaults, the property is repossessed and there is insufficient equity in the property to fully repay the lender.

This will therefore encourage many lenders to increase the availability of high loan to value products, including ‘95%’ mortgages. The mortgages advanced by lenders using the Help to Buy scheme will be subject to the lenders’ usual underwriting criteria.

Q. How does the Help to Buy: mortgage guarantee scheme benefit me?

A. If you can afford to repay a mortgage to purchase a newly built or an existing property but don’t have a large deposit, this scheme will benefit you by giving you access to low deposit mortgages. This means you won’t have to wait and save up for a large deposit to buy or move home.

Q. Am I eligible for the Mortgage Guarantee scheme?

A. Any borrower seeking to benefit from the Help to Buy Mortgage Guarantee scheme will need to meet participating lenders’ affordability and other criteria in the normal way.

But there are some further eligibility requirements which you will need to meet in order to get a Help to Buy: mortgage guarantee supported mortgage. In particular:

• the mortgage must have an LTV of between 80-95% (i.e. a deposit between 5% and 20% is needed)

• the mortgage must be a residential mortgage not a buy-to-let mortgage, so you will be planning to live in your house and not rent it out

• the property you want to buy must be in the UK and the purchase value must be £600,000 or less

• the borrower must pass the lender’s credit tests and must be able verify income

• the mortgage must be taken out on a repayment basis, rather than interest-only

• the mortgage must be to buy your only property, so you cannot use it to buy a second or further home. Borrowers will be asked to declare that they have no interest in any other property, or will have no interest in any other property once the mortgage completes, as part of the application process

• the scheme can be used for remortgaging

• the mortgage cannot be a guarantor or an offset mortgage

• the mortgage must be taken out by an individual or individuals – it cannot be taken out by a company

• other than using a Help to Buy: ISA to boost your savings, the scheme cannot be used with any other Government home-buying scheme such as Help to Buy: Equity Loan, Shared Ownership or Right to Buy. The deposit for the property can also not come from publicly-assisted loans

Q. Can joint borrowers apply for a Help to Buy: mortgage guarantee supported mortgage?

A. Yes. However, all borrowers will have to meet all the eligibility criteria for the Help to Buy Mortgage Guarantee scheme, including declaring that none of the borrowers will have an interest in any other property once the sale is completed.

Q. Can I benefit from the Help to Buy: mortgage guarantee scheme if I live in Scotland or Northern Ireland?

A. The Help to Buy Mortgage Guarantee scheme is available across the UK on properties with a purchase price of £600,000 or less. Borrowers across the UK can apply for mortgages through participating lenders.

Q. Can I benefit from the Help to Buy: mortgage guarantee scheme if I live in Scotland or Northern Ireland?

A. All borrowers need to pass lender’s standard criteria. As a matter of routine, lenders will carry out their normal credit and affordability checks on all borrowers. Mortgages supported by the Help to Buy Mortgage Guarantee scheme cannot be granted to credit impaired borrowers. This means borrowers who within the last two years have owed overdue payments equivalent to three months’ payments on any type of loans, had a County Court Judgement over £500 or bankruptcy order within the past three years will not be able to access mortgages under the scheme. Lenders will also check that borrowers can afford the mortgage and will ask for proof of income.

Q. Can I buy a new build property under the scheme?

A. The Help to Buy Mortgage Guarantee scheme can help you buy a newly built home or an existing property with a deposit of as little as 5%.

Q. Does the scheme guarantee my payments?

A. The scheme does not guarantee your payments – the guarantee protects your lender rather than you (as a borrower) against losses. The benefit of the Help to Buy Mortgage Guarantee scheme to the borrower is the ability to get a mortgage with a lower deposit. You are responsible for paying your mortgage under this scheme. Borrowers could lose their home if they do not keep up their mortgage repayments on a Help to Buy supported mortgage in exactly the same way as any other mortgage.

Q. What happens if my circumstances change?

A. A Help to Buy supported mortgage works in exactly the same way as any other mortgage. Borrowers should contact their lenders, in accordance with the terms and conditions of their mortgages if their circumstances change.

Q. What happens if I get in to payment difficulties? Will the Government repossess my house?

A. A Help to Buy supported mortgage works in exactly the same way as any other mortgage. If you get into payment difficulties you should contact your lender as soon as possible who will be able to provide advice to you. All forbearance and repossessions will be undertaken by lenders, not the Government.

Q. If I sell my property (bought with a Mortgage Guarantee loan) what do I need to pay back?

A. Nothing! Let’s say you bought a property under the Mortgage Guarantee initiative for £200,000 but then went on to sell this property for £250,000 (making a £50,000 ‘profit’) you’d get the entire £250,000, without having to pay back any government loan or share any profit. As you own the property fully, you receive the full benefit of any property appreciation with just your mortgage to repay as with any normal mortgage.

Q. What are the interest rates on the mortgage loan?

A. Unlike the Equity Loan scheme, the lenders will be advancing up to 95% of the value of the property, and they will price their products on that basis. Each lender that participates in this scheme will have their own individual attitude to risk and will price their products accordingly, so consult your mortgage adviser for an independent view on the low deposit products that are becoming available.

We can advise you on the best deals available at the time.

Q. Can I have an interest only mortgage under the Mortgage Guarantee initiative?

A. your mortgage must be on a repayment basis, not interest only. Offset and guarantor mortgages are also excluded from the scheme. Your mortgage can be taken out by an individual or individuals but not by a company.

Q. Can I use the Mortgage Guarantee scheme in combination with any other government home-buying scheme?

A. Other than using a Help to Buy ISA to boost your savings, you cannot use the Help to Buy Mortgage Guarantee scheme with any other government home-buying scheme such as Help to Buy Equity Loan, Shared Ownership or Right to Buy. Your deposit for the property cannot come from publicly-assisted loans.

Q. Do I have to pay any additional fee to the Government?

A. You don’t have to pay any additional fee to the Government to get a Help to Buy supported mortgage under the Mortgage Guarantee initiative.

Q. How much will a lender lend me?

A. The size of the mortgage you apply for must be less than 4.5 times your income.

Q. I thought after the economic crash in 2007 lenders stopped offering high LTV loans?

A. Many lenders reduced their maximum LTV limits to reduce their risks. However, as the economy has become more stable and because the Government are prepared to indemnify the lenses by providing guarantees participating lenders are able to offer more mortgage products to borrowers with small deposits.

Q. How long is the H2B Mortgage Guarantee scheme available for?

A. The scheme began in October 2013 and is set to run until 31 December 2016. However, the Bank of England will be monitoring the impact of the scheme closely, and could potentially make changes to the qualifying criteria or withdraw it entirely if they feel it necessary to do so

Q. Can AscentiaUK help me to arrange a Help to Buy Mortgage Guarantee loan?

A. Yes, the Help to Buy Mortgage Guarantee scheme is offered by mortgage lenders across the UK and we would be delighted to assist you in finding the most suitable and competitive deal if you are looking to go down this route.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

 

 

Help to Buy ISA FAQ’s

Q. Am I eligible for the Help To Buy ISA?

A. To qualify for a Help to Buy: ISA you must:

• be 16 or over

• have a valid National Insurance number

• be a UK resident

• be a first time buyer, and not own a property anywhere in the world

• not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps. See below for more detail.

Q. Can I buy any property using a H2B ISA?

A. To Qualify for the ISA bonus the property you are buying must:

• be in the UK

• have a purchase price of up to £250,000 (or up to £450,000 in London)

• be the only home you will own

• be where you intend on living

• be purchased with a mortgage

Q. Can I use my H2B ISA with any other schemes?

A. You can use the Help to Buy: ISA with other government schemes, including the Help to Buy: mortgage guarantee scheme, Help to Buy: Equity Loan scheme and Shared Ownership.

Q. I have another ISA – can I save into a H2B ISA?

A. Yes, but you will have to take additional steps.

Q. How long will Help to Buy: ISAs be available for?

A. You’ll be able to open a Help to Buy: ISA until 30 November 2019. After that date they won’t be available to new savers anymore – but if you opened your Help to Buy: ISA before then you can keep saving into your account.

You must claim your bonus by 1 December 2030.

Q. What is the definition of a first time buyer?

A. A first time buyer is someone who does not own, and has never owned, a home anywhere in the UK or the world. A full definition of this can be found here.

Q. I have property in a trust, do I still qualify as a first time buyer?

A. If, as an individual, you are entitled as a beneficiary to, or to a share in, a residential property as a result of a trust (including a trust created by a will or divorce), then you are deemed to have an interest in the property and are thus not classed as a first time buyer.

However, you are classed as a first time buyer and eligible for the government bonus through the Help to Buy: ISA scheme if you are:

(a) named as a beneficiary of residential property in the will of a person who is still living; or

(b) only acting in a trustee role and will not be entitled as a beneficiary in the future, (and you do not have any other interests in residential property).

Q. Can I open a Help to Buy: ISA on behalf of someone else?

A. No – Help to Buy: ISAs must be opened by individuals aged 16 years and over.

Q. Can I open a Help to Buy: ISA with someone else?

A. No. Help to Buy: ISAs are only available to individuals. But, you can put more than one government bonus towards the home you are buying. So, if you are buying a home with someone else who is also a first time buyer, they can open and save money into their own account and receive a government bonus.

Q. How many Help to Buy: ISAs can I have?

A. You can only have one Help to Buy: ISA at any one time. Unlike a cash ISA, you can’t open a new one every year. But you can transfer your Help to Buy: ISA from one bank or building society to another.

Q. I already have a cash ISA – can I open a Help to Buy ISA too?

A. If you have paid into a cash ISA this tax year, in order to open a Help to Buy ISA, you will have to transfer your active cash ISA to a Help to Buy ISA. You can transfer up to £1,200 of your active cash ISA balance into your Help to Buy ISA.

Anything more than this should be moved into either a stocks and shares ISA, an Innovative Finance ISA, or a non-ISA account.

Savers are recommended to speak to ISA providers to discuss the options they have.

You will be able to continue to save money into a stocks and shares ISA and a Innovative Finance ISA, even if you open a Help to Buy ISA. However, the total amount saved must not exceed the annual subscription limit.

Q. Do I have to put away £200 every month?

A. No. You don’t have to put money away every month and the amount you save into the account every month is up to you – as long as you don’t go over £200.

You can’t build your allowance though. For example, if you don’t put money away during January and February, this doesn’t mean you’re allowed to save £600 during March.

Q. Do I have to make the deposit at a certain time during the month?

A. Your monthly allowance is per calendar month. This means, for example, that if you open your account on 28 March, you will have until the end of 31 March to make any deposits up to the first month’s limit of £1,200. You can then deposit up to £200 any time between 1 April and 30 April and in all following months.

Q. Can I make multiple deposits into my Help to Buy: ISA during a single month?

A. Yes. As long as your provider’s terms and conditions allow it, you can make multiple deposits of up to £1,200 in your first month, and up to £200 in following months.

Q. Can I withdraw money from my Help to Buy: ISA?

A. Yes. You can withdraw money from your Help to Buy ISA account at any time. But you can’t put all the money you’ve withdrawn straight back into the account – you’re still only able to save up to £200 in every month. For example, if you deposit £200 and then withdraw £50 in the same month, you will have to wait until the next calendar month to make another deposit.

There are exceptions if you withdraw your money in order to purchase a home and the sale falls through.

. Will my interest count towards my government bonus?

A. Yes. Your government bonus will be calculated based on the amount of money you have in your account when you close it. This includes both the money you have saved, and any interest you have earned on that money. You will not receive a government bonus of more than £3,000.

Q. Will I get interest on my government bonus?

A. No. Your government bonus won’t be paid into your account. When you purchase your home, your solicitor or conveyancer will apply for your bonus. Once they receive the bonus, they will transfer it to the seller with any other money you are putting towards your new home.

Q. Do I have to take my mortgage out with my Help to Buy: ISA provider?

A. No. You are free to find the mortgage which best suits you.

Q. Can I buy a property without a mortgage?

A. No. The property you are buying must be mortgaged in order to be eligible for the government bonus.

Your home may be repossessed if you do not keep up repayments on your mortgage.

For further information on the Help To Buy ISA initiative please visit the Government Help to Buy website

Not all products and services mentioned are regulated by the Financial Conduct Authority
The guidance and information contained within this website is subject to the U.K. regulatory regime and is therefore primarily targeted at customers in the U.K.
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AscentiaUK is a trading style of Ascentia Mortgage Solutions Limited. Ascentia Mortgage Solutions Limited is an Appointed Representative of Stonebridge Mortgage Solutions Limited which is authorised and regulated by the Financial Conduct Authority Under Number 5601592 Registered Office: Ascentia Mortgage Solutions Limited, 2 Northside Wells Road, Chilcompton, Radstock, England BA3 4ET
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YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.