Insights, Mortgages & Renting

Not a Rich Kid? Buying Your First Home With Right to Buy Scheme

flik eco finance buying your first home with right to buy

Let’s face it, most of us aren’t sitting on a mountain of cash to buy our first house. The crazy thing is we would need to get together anywhere between £80,000 & £300,000 if we wanted to use a traditional mortgage to buy our first home…that’s just a ridiculous amount of money for most people.

If you’re looking to buy a house & can’t put together the biggest deposit in the world, then the Government Help to Buy Scheme could be perfect for you!

Help to Buy is just a loan from the Government to help you buy your first house, or one of those shiny new build flats if you already own a house.

For any house under £600,000 you can borrow up to 20% of the overall house price and up to 40% in London. You just need to get together a 5% deposit for the house you want to buy, this might take a bit of sacrificing but it will be worth it!

The really good thing about the Help to Buy Loan is that it is interest-free for the first 5 years!

How Help to Buy Works For Dummies

  1. You get together a 5% deposit for the new-build or house you want to buy
  2. The Government lends you up to 40% of the house price depending on where you live. 20% for most people, 40% for people looking to buy a house in London.
  3. You find a mortgage to borrow the rest of the money to buy the house
  4. You’ve got 25 years to pay back the Help to Buy Loan
  5. If you sell your house you’ve got to pay back the same percentage of the original Help to Buy Loan. This means that if you’ve taken a loan for 40% and then sell your house after a few years, you’ll have to give the Government back 40% of the sale.

What Happens After 5 Years, How Much Interest Do You Have To Pay?

You get 5 years of paying no interest on your Help to Buy Scheme loan. But… in year 6 you will be charged 1.75% interest on the money you’ve borrowed. Then it gets even more expensive, the interest you pay rises to match inflation plus 1% each year.

How to Apply for a Help to Buy Loan?

It’s easy to just speak to your local Help to Buy Agent or google ‘Help to Buy Agents Near Me’

author-avatar

About Jermaine Hagan (The Plantsman)

Jermaine Hagan, also known as The Plantsman is the Founder of Flik Eco. Jermaine is the perfect hybrid of personal finance expert and nemophilist. On a mission to make personal finance simple and accessible, Jermaine uses his inside knowledge to help the average Joe, Kwame or Sarah to improve their lives. Before founding Flik Eco, Jermaine managed teams across several large financial companies, including Equifax, Admiral Plc, New Wave Capital & HSBC. He has been featured in several large publications including BBC, The Guardian & The Times.

Related Posts