Help to Buy: Mortgage Guarantee
Q. Who is it for?
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 – and for what types of property?
Existing home owners and first time buyers
Buyers with a minimum deposit of 5% of the purchase price
Buyers who are borrowing from a participating lender
Available across the UK on newly built or ‘second hand’ up to £600,000
Residential property, where you plan to live in it and not rent it out
Your only property, so you cannot have an interest in any other property, anywhere in the world
Q. How does it work?
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