Home Move FAQ and Jargon Buster
Here you will find frequently asked questions and explanations of some of the jargon and legal language associated with the home moving process.
- What is the Help To Buy scheme
The Help to Buy scheme offers a loan where the government lends first-time buyers money to buy a newbuild home. In return for the loan the Government will take a mortgage over your home. This mortgage will be based on the percentage of the purchase price you borrow from the Government. When you sell your home, you must repay the same percentage of the sale price as the initial equity loan. This means that if you take out an equity loan for 20% of the purchase price then you must repay 20% of the price at which you sell. If the value of your property has increased, the amount you have to pay back will likely be more than you originally borrowed.
There are certain criteria to be met in order to qualify to use the scheme.
- How do I qualify for the Help To Buy scheme
To qualify for the Government Help To Buy scheme you must meet the following criteria:
- The purchase price must not exceed the maximum set for the area. These vary across the country, ranging from £186,100 to £600,000
- You must be a first-time buyer
- You must live in the property
- The maximum you can borrow is 20% of the purchase price (or 40% in London)
- You must be purchasing a new build property
- You must pay a minimum deposit of 5% from your own money
- You must take out a mortgage
- What are the costs of using the Help To Buy scheme
The Help to Buy loan is interest free for the first 5 years but you are required to pay a £1 monthly management fee by Direct Debit. After the end of the interest free period, and until you repay the loan in full, you will be required to pay:
- The £1 monthly management fee
- Monthly interest at the rate of 1.75% per year of the equity loan amount
The interest payable will rise each year. The increase will be based on the Consumer Price Index (CPI) plus 2%. The payments due on the Help to Buy Loan are in addition to the payments you are required to make to your mortgage lender.
Please note that all information provided in this FAQ is for general reference only. It should not be used as a sole or definitive source, nor is it intended to be used for decision making in place of appropriate advice from a qualified legal professional. As such the information is provided as-is and Brevis cannot accept any responsibility or liability for any loss or damage resulting from any errors or ommission in, or any reliance on, information contained in this guide.