ESTATE AND LETTING AGENTS FOR HALL GREEN, BIRMINGHAM, SHIRLEY & SOLIHULL
Mortgages, Help to Buy and Mortgage Guarantee Schemes
Mortgages (You can read about 'Help to Buy' & Mortgage Guarantee schemes further down this page)
If you are purchasing a home, and you are not a cash buyer, you may well require a mortgage to help complete the purchase of the property. A mortgage is defined as an amount of money borrowed from a mortgage lender, such as a bank or building society, in order to purchase a property. The ‘mortgage loan’ is normally secured against the property and is repaid back to the lender over a fixed period of time together with the accrued interest.
There are many different types of mortgage and many thousands of mortgage products offered by lenders. Comparing them all to find which might be the best deal to suit your requirements is an extremely complicated process. We can offer you the services of a local independent Financial Advisor or Independent Mortgage Broker who will be happy to arrange an appointment at local offices or in the comfort of your own home.
Help to Buy Scheme
The budget of 2013 saw the announcement of the government’s new ‘Help to Buy Scheme’ extending a previous scheme, FirstBuy, which was aimed solely at first-time buyers. Rather than just applying to first time buyers purchasing a new home, the new scheme enables all buyers to put down a 5% deposit on a newly built property, with the ability to borrow up to a further 20% funded from a shared equity loan, the remaining 75% coming from a normal mortgage.
This loan is in effect the government taking a stake in the value of the property with the loan needing to be repaid when the property is sold. If the property has increased in value by the time it is sold, the value of the loan will have increased by the same relative amount. For instance if the house has doubled in value, so too will the value of the shared equity loan. However, if the property has decreased in value during the period, the shared equity loan will also have fallen in amount.
The shared equity loans themselves are interest free for the first five years, after which a 1.75% annual fee is initially charged and this rises by 1% above the Retail Prices Index (RPI) measure of inflation. The scheme started in April 2013 and covers new homes up to the value of £600,000. The previous income limit of £60,000 for applicants no longer applies.
Mortgage Guarantee Scheme
A new scheme was also announced in the 2013 budget that is effectively designed to increase mortgage availability to people with smaller available deposits who want to purchase either a new house or an older one.
The scheme started at the beginning of 2014 and runs for three years. The scheme is designed to underwrite up to £130 billion of mortgage loans with the government guaranteeing 15% of the value of the mortgages on houses of value up to £600,000. This is intened to allow buyers, whether first time or second time 'step uppers', to access lower mortgage rates that are usually only available to people with larger deposits of 20%. Effectively the lenders will only be at risk for 80% of the value of the property with the government guarantee covering 15% and the remaining 5% being the borrower’s deposit.
In conjuction with local solicitors and conveyancers we are able to offer packages that include the legal fees* for selling only, or for selling and buying. These packages typically save you hundreds of pounds compared to arranging the elements separately, and can make the whole process of selling your home and buying another a much simpler process.
(*Third party disbursements and expenses may be extra)