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Buy a Home With some Governmental Help: Right to Buy and Help to Buy Mortgages

Author: Alicia Karan
by Alicia Karan
Posted: Apr 25, 2022

The Government has a number of schemes to help you buy your own home and here we will look at the two major schemes, Right to Buy mortgages and Help to Buy mortgages, with the purpose to give you an idea about what they are and how they work.

What is the Government Help to Buy Mortgages Scheme?

The Government help to buy mortgages is a scheme that was introduced in 2013 to help people who were struggling to buy a home. The scheme offers interest-free loans for up to 20% of the value of a new-build home, which can be used as a deposit. The scheme is available only for first-time buyers.

The loan is considered paid when the property is sold, or at the end of the mortgage term, whichever comes first. There is also a limit on the price of the property that can be bought under the scheme. The help to buy mortgages has helped thousands of people onto the property ladder who would otherwise have been unable to do so. If you are thinking of buying a home, then the help to buy scheme could be an option worth considering.

How the Government Help to Buy Mortgages works

The Government help to buy scheme is a great way for first-time buyers to get on the property ladder. The scheme offers an interest-free loan of up to 20% of the value of the property, which can make buying a home more affordable. To be eligible for the scheme, the value of the property must be under £600,000. The property must also be your main residence and you must have a minimum 5% deposit. Besides that, you cannot rent the house and it must be a new building.

A help to buy ISA is also a type of help from the Government, for those who are not decided yet to buy a mortgage. It’ is working like a monthly deposit, where you can put £200 and the Government will put for you an extra £50 (but not more than £3000).

If you are thinking of buying a home with the Government Help to Buy Scheme, then get in touch with a mortgage broker and find the help you through the process.

How the Government Right to Buy Mortgages works

The https://ukmoneyman.com/right-to-buy/ right to buy mortgages is only available to tenants of social housing who have been on their property for at least three years. Under the scheme, eligible tenants can purchase their homes at a discount of up to 70% off the market value. The Right to Buy mortgage covers 100% of the purchase price, so there is no need for a deposit. Interest rates on the Right to Buy mortgage are set at 1.75%.

Pros and Cons of the Government’s Mortgages Schemes

The government's scheme has been both praised and criticized since its launch. So, what are the pros and cons of the help to buy and the right to buy mortgages?

PROS

  • The schemes have helped many first-time buyers get on the property ladder who may have struggled to do so otherwise.
  • It has also helped to boost the housing market by increasing demand for properties.
  • The schemes are flexible, with buyers able to choose any type of property, whether a house or a flat.

CONS

  • There are still some criteria not so flexible like buying a new building or being a first-time buyer.
  • You cannot rent the house, if you buy it using https://ukmoneyman.com/help-to-buy/ help to buy mortgages. The house may be used only as your main residence.
  • Some argue that the scheme has contributed to rising house prices, making it more difficult for first-time buyers to get on the property ladder.
  • There have also been concerns that the scheme is open to abuse, with some people taking out a government mortgage and then selling the property at a profit.

Loan Qualification Requirements for a Government Mortgage

Under the help to buy mortgage guarantee, eligible buyers can purchase a property with as little as a 5% deposit. The government will then provide a guarantee to the lender for up to 20% of the value of the property, which gives lenders the confidence to offer more favourable terms. This scheme has helped many first-time buyers get on the property ladder who may have previously struggled to do so. However, there are still some loan qualification requirements that must be met to take advantage of the Help to Buy mortgage guarantee.

Lenders will still assess your affordability in the same way they would for any other mortgage application. This means that you will need to prove that you have a regular income and can make the monthly repayments on the loan. You will also need to pass a credit check to be eligible for help to buy a mortgage guarantee. This is because lenders want to be sure that you are a responsible borrower and are likely to repay the loan. The same situation goes with the right to buy mortgages.

Remember that the criteria for a first-time buyer may change yearly. You can check here if you are eligible for a first-time loan, in 2022.

Conclusion

There are some Government schemes really helpful for some categories of people, like first-time buyers or council tenants that can use them to buy a property. For example, the help to buy scheme is a great way for first-time buyers to get on the property ladder. The scheme is open to all buyers, regardless of their income. There are a few things to bear in mind when applying for the scheme, but overall, it is a straightforward process. If you are thinking of buying a home, the help to buy scheme could be the perfect option for you.

If you are a council tenant, you can use the right to buy mortgages to buy the house you lived in, for the last couple of past years. In this way, you are privileged among the other landlords.

About the Author

Alicia is a professional writer for ukmoneyman.com. Having a mortgage broker by your side will give you the chance to be informed of the options that are available to you based on your financial and personal circumstances.

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Author: Alicia Karan

Alicia Karan

Member since: Nov 21, 2021
Published articles: 14

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