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Credits for first time home buyers and Help to Buy scheme explained

In an effort to stimulate the housing market, the government created the Help to Buy scheme. If you’re renting but looking to buy your first home, this is a great scheme that helps you borrow the money you need. It doesn’t offer credits for first time home buyers but it provides you with part of the loan amount you’ll need.

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Help to Buy

Equity loans under the Help to Buy scheme is open for home owners and first time buyers purchasing homes up to the value of £600,000. If you buy using this scheme, you won’t be able to sub-let your home. This must also be your only property.

How it works

You’ll need 5% of the property’s value for the deposit, but if you can find the money, you’ll qualify for the 20% loan that the government provide, leaving you a 75% mortgage. The best thing about the Help to Buy scheme is that you won’t be charged a loan fee for the opening 5 years of the loan. When you loan reaches its 6th year, you’ll have to pay a 1.75% loan rate. This rate increases each year, using the Retail Price Index plus an additional 1%.

Application process

You’ll need to contact a Help to Buy agent operating in your area. You can use gov.uk to locate one. You’ll also need to buy your new home from a registered Help to Buy builder. You’ll get a list of the registered builders when you contact the agent.

Paying the loan back

When the time comes to sell your property, you’ll have to pay the loan back. You also need to pay it back after 25 years if you keep your property for that period of time. The property’s market value at the time determines the amount you’ll be asked to repay.

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