McHale & Co. Solicitors Blog

Help To Buy Explained!

The government launched the second phase of its Help to Buy scheme on 8 October 2013. I've heard people describe it as the possible date that people will look back on as being the start of a new property bubble. The government scheme gives a guarantee to a participating lender when they lend to a buyer who has a small deposit of between 5-20 per cent of the purchase price. The government will guarantee up to 15 per cent of the loan to the lender.

In exchange for this the lender pays a fee. For borrowers with a deposit of:

  • 5-10 per cent, the fee will be 0.9 per cent of the loan
  • 10-15 per cent, the fee will be 0.46 per cent of the loan
  • 15-20 per cent, the fee will be 0.28 per cent of the loan

If a buyer has a deposit which falls into a tranche that the lender is participating in, the lender must use the Help to Buy scheme.

This part of Help to Buy is available to first-time buyers and people moving home who are purchasing properties valued at up to £600,000. The guarantee only applies for the first seven years of the mortgage.

Unlike the first phase of the scheme, which only applied to buyers wishing to purchase new-build homes, the second phase applies to the secondary market as well as new properties. The loans have to be capital repayment loans. The interest rates are likely to be higher than for non-Help to Buy loans.

These loans are now available from:

  • Royal Bank of Scotland
  • National Westminster Bank
  • Lloyds
  • Halifax
  • HSBC
  • Virgin Money
  • Aldermore

I have had lots of phone calls in the last week over the scheme and I certainly think that it will lead to an increase in activity in the market. Of course those buying using the scheme will be those most susceptible to an increase in interest rates in the future. This leads me to think that the Government and Bank of England must be very sure that rates are not going to increase significantly for a number of years.

If further information is needed, please don't hesitate to contact me at

Categories: Conveyancing
Tags: Help To Buy

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