New Build Schemes
As New Build experts we are very familiar with the wide range of schemes operated by many developers to help you achieve ownership of your new home.
Here are some notes on the most popular schemes currently available........
NewBuy is aimed at anyone (not just first time buyers) who is thinking of buying a newly-built home but does not have a large enough deposit to qualify for a regular mortgage. Most lenders are reluctant to offer much more than 80% of the purchase price (known as loan-to-value – LTV) of a property at present, meaning a buyer has to find a significant deposit from their own pocket following a 5% gift from the developer.
NewBuy offers the possibility of applying for a mortgage of 95% LTV to buy a newly-built house priced at up to a maximum of £500,000. As a purchaser you will still have to find a deposit equivalent to 5% of the purchase price yourself and will still have to meet the mortgage lender's eligibility criteria based on income and credit scoring as you would for a regular mortgage.
If you have a deposit of at least 5% and meet the mortgage lender's affordability requirements, you may be able to buy a newly built home under the NewBuy scheme.
The scheme applies in England only and to qualify for NewBuy, buyers must be UK citizens or those with a right to remain indefinitely in the country. Qualifying properties have to be:
- New build residential properties – NewBuy does not apply to anything other than newly built properties being sold for the first time priced up to £500,000 - there is however no cap on your income to qualify for the scheme.
- Bought in full ownership - NewBuy does not apply to properties bought using interest-only mortgage products and it will not be available for shared ownership or shared equity purchases. (Government backed affordable housing shared ownership a seperate scheme) It is also not possible to use NewBuy in conjunction with any other publically funded mortgage scheme.
- Your main home – NewBuy cannot be used for the purchase of second homes or as an investment purchase or for buy-to-let purposes.
Many of our builder partners are signed up to the NewBuy scheme and we have a range of lenders to choose from suject to status and your personal circumstances.
Help to Buy 1 (Shared Equity Scheme)
Help to Buy was launched by the government in April 2013 to support and drive purchases of New Build Homes. The main aim of it is to improve the access to and affordability of mortgages – specifically for those people who cannot afford a large deposit.
The Help to Buy scheme will be available on all newly built homes in England up to £600,000.
The Key Facts about Help to Buy
The Government will lend you up to 20% of the value of your new property through an equity loan, which will be interest-free for the first five years and can be repaid at any time or on the sale of your home. Customers will only need a minimum 5% deposit* to qualify. Help to Buy is available to all purchasers, not just first-time buyers. The scheme is available from 1 April 2013 on all new build homes in England up to the value of £600,000. There is no household annual income limit, but it is only available on new build properties and customers will only need to secure up to a 75% mortgage.
How it works
The Government will lend up to 20% of the value of a new build home through an equity loan. The buyer contributes a deposit of their own of between 5% and 20%, then the Help to Buy scheme tops that deposit up to make it a 25% deposit which leaves the buyer needing a mortgage for 75% of the property value.
Who is eligible?
The equity loan will be available to all purchasers of newly built homes, not just first time buyers, although it is restricted to a maximum property value of £600,000. All purchasers will also be subject to a Housing & Communities Agency (HCA) affordability check.
What does it cost?
The government equity loan is interest free for the first five years after which a fee of 1.75% will be charged from year six, rising annually by RPI inflation plus 1%. The equity loan can be repaid at any time within 25 years (or the terms of the mortgage), or on sale of the property. The initial loan is repaid, plus a proportion of any growth in the property value.
When is it available?
This scheme was launched on 1 April 2013, so is available now, and is scheduled to run for 3 years.
For advice on getting a new mortgage in conjunction with this scheme please contact us today.
Help to Buy 2 (Mortgage Guarantee Scheme)
What is the ‘Mortgage Guarantee Scheme’’?
The Mortgage Guarantee Scheme is the second part of the Governments flagship ‘Help to Buy’ initiative, designed to stimulate the UK housing market. It helps first time buyers and homemovers to get a mortgage, even if you only have a small deposit. If you have a deposit of between 5% and 20% then mortgage lenders should be able to lend you the money required to fund the balance of the purchase price of your new property, subject to status. Please contact one of our Mortgage Advisors, who will explain the scheme in more detail, assess your eligibility and provide advice on which lenders are taking part.
This scheme is available to existing homeowners who are looking to move, as well as first-time buyers. It is available for properties up to a value of £600,000.
How does the scheme work?
A mortgage supported by the Help to Buy Mortgage Guarantee Scheme works in exactly the same way as any other mortgage except that under the scheme, the Government provides a guarantee to lenders, enabling them to provide mortgages up to 95% of the purchase price, without carrying the burden of the risks normally associated with this type of lending. Your Mortgage Advisor/Lender will still need to check that you can afford the mortgage and that you meet the criteria necessary to qualify.
Most High Street Lenders are taking part in the scheme and the products on offer are competitive.
Terms and conditions: To qualify for a mortgage supported by Help to Buy Mortgage Guarantee, the property you are purchasing could be an existing or new-build home in the UK, priced up to £600,000 you mustn’t own any other property anywhere in the world at the time you complete the purchase of your newhome supported by the Help to Buy Mortgage Guarantee Scheme. Your mortgage must be taken on a Capital and Interest Repayment basis.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee of 0.3% of the amount borrowed.
If however you arrange a mortgage on a property from one of our associated new homes developers, we will waive this fee.