Help to buy, is it working?

 I’m coming across a lot of confusion in relation to the Help to Buy scheme launched by the government.  I believe that’s because they haven’t explained it very well at all.  So as a buyer, or taker-outer of such a scheme, this is all you need to concern yourself with.

*there will be t’c & c’s for eligibility.  It’s effectively for people buying a property to live in that only own that one property.

Are you buying a new build property?

If so, you will get a cracking deal that is structured as such:

You put down a 5% deposit. 
Governement chuck in 20% 

You get a 75% mortgage.

So for your 5% deposit, you only have to pay interest on a 75% loan, which is superb.  


Are you buying any other residential property other than a new build?  

This part of the deal is a bit naff, to be honest.  The government are guaranteeing part of your loan (15%) to the lender.  The only benefit to you as a customer from this is that the lender should reduce their rates and be more willing to lend at 95% mortgages.  But that’s their choice.  

You put down a 5% deposit. 
You get a 95% mortgage.

So for your 5% deposit you have to pay interest on a 95% loan, which is erm. normal.  

Rates are circa 5% apr, so they’re about 1% more than if you’ve got a 10% deposit.  


So in conclusion, if you’re buying a new build property you’re going to get a truly, utterly fantastic deal, whereas if you’re buying a second hand home, it’s not.