Help to Buy Mortgages
If you have a 5% deposit you may qualify for the government help to buy mortgage scheme.
This is very popular amongst First Time buyers although Homemovers can also benefit from the scheme.
If you need a bad credit mortgage as you have had missed payments, defaults or CCJ’s registered against you, we have specialist lenders that can help you buy your next home.
Help to Buy Mortgages with Bad Credit
The Help to Buy scheme is a Government initiative set up to stimulate the housing market and help first time buyers and existing home owners purchase new build properties to live in.
This scheme is designed for people with only a 5% deposit being available. The aim by the Government is to help people get onto the housing ladder. With this scheme the Government lends you up to 20 per cent of the price of the property (40% in London) and payments on this government loan will only begin after 5 years where you will pay the interest only. Only New build properties under the value of £600,000 qualify for this scheme, with a requirement of a 5% deposit.
The 20% Government loan (40% in London) obviously reduces the initial mortgage repayments significantly. At the end of the mortgage term, or if the house is sold then the government loan needs to be repaid.
Help to buy mortgages are available from most high street lenders plus if you have any bad credit in the form of missed payments, defaults or county court judgements we have lenders who can provide bad credit help to buy mortgages.
The government has a lot of information about the help to buy scheme on its website which you can visit - www.helptobuy.gov.uk.
London Help to Buy Scheme – If you are based in London due to the higher property prices the government will consider giving you an equity loan of 40% rather than the 20% offered to the rest of the country. More information on this can be seen on here.
Bad Credit Help to Buy Mortgages
To qualify for the high street lenders you need to have a good credit score, however some clients have unfortunately had some bad credit in the form of missed payments, defaults and county court judgements. We have lenders who will provide bad credit mortgages to clients wishing to purchase a property through the help to buy scheme. This really is a specialist area and you need to speak with mortgage advisers who are experienced in this field.
It is a good idea that you get a copy of your credit report from agencies such as Experian and/or Equifax and this will show you a detailed report of all your credit commitments over the last 6 years that you have had along with your payment conduct plus any County Court Judgments/IVA or Bankruptcy that you may have had.
We have a team of mortgage advisers that can consider and advise on your individual position and circumstances as to the most suitable help to buy mortgage scheme that is appropriate for you.
Advantages of the Help to Buy Scheme
- You only need a 5% deposit to purchase a property and this deposit could be from savings or maybe gifted from close family.
- By purchasing a property you have potentially more long term stability whereas if you was renting you may have to move several times through no fault of your own.
- Paying for a mortgage and the equity loan (after 5 years) maybe cheaper than renting.
Disadvantages of the Help to Buy scheme
- If you was to staircase and pay off all or an element of the equity loan this will be linked to the current property value and may cost you more.
- You can only staircase a minimum of 10%.
- For the 1st 5 years you do not pay anything towards the equity loan however in year 6 you have to pay the interest at 1.75% and then the rate increases every year after that at the RPI (Retail Prices Index) measure of inflation plus 1% until the loan is paid off. This is on top of the mortgage payments you have to make.
- The payments that you make on the equity loan are only interest payments, so the balance is not going down.
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