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The Different Types of Help-to-Buy Mortgage Schemes for Buying a Home in Leeds

Help to Buy, Shared Ownership & other schemes  

In 2013, to help boost the market after the credit Crunch left many home buyers and sellers in a difficult situation, the Government introduced Help to Buy. Help to Buy is a series of schemes to help First Time Buyers in Leeds struggling to save enough for a deposit to put their foot onto the property ladder. 

Help to Buy Equity Loan 

This scheme is an excellent gateway into the mortgage world and could be just what you need to get the ball rolling with your mortgage application. To qualify for the Help to Buy Equity Loan scheme, you have to be a First Time Buyer, and you can only use the scheme for new builds only.  

This Help to Buy scheme relies on you to have a deposit of 5% or more. The Government will top up the deposit percentage that you have to make a 25% deposit. For example, if you have a minimum of a 5% deposit, you will receive a 20% Equity Loan. 

You must know that this is a loan and not a gift. This loan will be interest-free for the first five years; if you don’t quite manage to pay it off within these five years, you will start receiving interest on the amount left on the loan. This interest rate will increase every year. So, you will have your 75% mortgage to pay for, as well as the 20% Equity Loan each month. 

As a Mortgage Broker in Leeds, we know that sometimes it can be challenging to balance your mortgage payments and equity loan repayments simultaneously. If you are struggling to meet your payments or have doubts about being able to, it may be a good idea to look into remortgaging to raise capital. If you are able to remortgage and raise capital, you could then consolidate a proportion of your equity loan by paying it off with the capital raised. This will likely increase your monthly mortgage payments and your term may slightly extend. However, it should reduce your equity loan payment, and you may end up in a somewhat better position than you were before. 

Help-to-Buy-Equity-Loan

Help to Buy Shared Ownership

Shared ownership allows applicants to buy a share of a property. How the scheme works is you own a percentage of a property that has to be between 25%-75%, and then you pay the rent on the remaining percentage. 

The remaining percentage of the property is likely to be owned by the housing association. However, you can eventually repurchase this percentage further down the line if you wanted to. If you like the property and have long-term plans to stay there, you could buy the remaining share. People usually do this once they have the money and have settled into the property. 

With the Help to Buy Shared Ownership scheme, you will still likely have to pay 100% of the ground rent and the property’s service charges, irrespective of what percentage you own. 

shared-ownership

Help to Buy Armed Forces

This scheme was introduced off the back of the Help to Buy Equity Loan scheme in 2014. It aimed to help Armed Forces members get onto the property ladder as a thank you for serving their country. 

If you are struggling to get yourself on the property ladder and are a member of the Armed Forces, this scheme could be perfect for you. The Government reviews the scheme in December 2022, and they will decide whether or not it should continue running. As a Mortgage Broker in Leeds, we know how much this scheme is valued, and we hope that the decision is to keep it available. 

armed-forces-help-to-buy

Lifetime ISA

The Lifetime ISA is a great way to get yourself on the property ladder. You can use this scheme to help purchase your first home. If you are a First Time Buyer in Leeds, this scheme might appeal to you. 

The Lifetime ISA is a savings account where your money grows tax-free. As well as your tax-free savings, the Government will also top up whatever you have saved by an extra 25%. The maximum amount that you can save each year is £4,000, so if you manage to save this much, overall, with the government’s 25% top-up, you will have £5,000 each year. If you save a little less, the Government will still top up your savings by 25%. 

lifetime-isa-infographic

Here are the criteria for the Lifetime ISA: 

  • The property has to cost £450,000 or less 
  • You have to buy the property at least 12 months after you access the Lifetime ISA 
  • You must use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them 
  • The savings must be used towards the purchase of your first property. 
lifetime-isa

We hope this information was useful, if you have a question or want Help to Buy Mortgage Advice in Leeds, don’t hesitate to get in touch with our friendly advisors, 8 am – 10 pm, 7 days a week! We also offer a free mortgage consultation to every customer no matter their mortgage situation. 

Leedsmoneyman.com & Leedsmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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