Does Help to Buy really help first time buyers?
Getting onto the housing ladder feels impossible to many unless you are fortunate enough to benefit from the bank of mum and dad. Without this luxury, especially if you are in rented accommodation, then saving for a substantial deposit after paying your monthly rent is tough.
Help to Buy gives an opportunity to those who can achieve the following;
1) Have a 5% deposit
2) Pass an affordability calculation with HTB London (we can help you with this)
3) Mortgage cannot be more than 4.5 x your annual income(s) – single or joint income
4) Get an agreement in principal with a specialist HTB mortgage lender – we can assist here too
Once the above is achievable, and you have a property in mind (sadly it must be a new build property which is accepted in advance with the Help to Buy scheme), then you can apply via Help to Buy London to secure this part of the finance.
The way HTB, in London, works is that the scheme loans you a 40% interest-free loan for 5-years, you put down your 5% deposit and the lender will loan up to 55% loan-to-value.
After 5-years you can either repay this equity loan back to HTB or you then start paying interest, presently at a rate of 1.75% (increasing annually by the RPI + 1%). Many customers of us have benefited from house price increases and have re-mortgaged to repay this equity loan. Obviously, this is highly dependent on house prices increasing and not a strategy you can plan for.
Securing finance via HTB London needs experienced professionals (for legal and mortgage work) around you to ensure the proceed is as slick as it can possibly be. Thankfully, this shouldn’t cost you anymore in fees than you would normally pay – for a start if you use our services, we will NEVER charge you a broker fee and we know HTB inside out!
If you are not using us then we urge you to ask the mortgage adviser when he / she last did a HTB mortgage and how many do they normally do – this will give you an idea and save you a massive headache as they try to figure out the demanding processes. Same goes for the solicitor / conveyancer!
So, these are the pros and cons. On balance we feel that the scheme is a great way to get onto the housing ladder especially in this present market whereby new homes are having to ensure their pricing is comparable to the second-hand stock on the market.
We act for many buyers in key new build areas such as Woolwich, Greenwich, Deptford, Charlton, Brockley and Eltham and, as mentioned earlier, we do not charge broker fees so book your initial consultation and take advantage of our experience.