Help to Buy has now been launched in Northern Ireland which is great news for all First Time Buyers.
This is a Guarantee scheme - Available for anyone and not just new builds.
This scheme is designed to encourage lenders to offer more mortgages to those with small deposits, but will work in the background between banks and the Government.
It’s not just for new build properties or first time buyers. This allows all customers to buy a house with just a 5% deposit.
What does it mean in practice?
Those with small deposits or little equity in their current home are often excluded from getting a mortgage. Lenders are worried that if the worst happens and it has to repossess the property to get its money back, it may not get enough from the sale to cover the amount it’s owed. The more equity the borrower has, the smaller the loan, so the less chance of this happening. So the Government hopes it can encourage more lending to those with small deposits by guaranteeing their payments.
Am I eligible?
You’re eligible if the following below applies:
• This scheme is designed for anyone with a deposit of less than 20%, on new or existing properties. This includes people already on the property ladder but who don’t have the cash and/or equity in their current home to make the next step up.
• For their main residence. People will not be able to use the scheme to buy a second home or a buy-to-let and will have to sign a declaration to confirm this.
• On a UK property with purchase value of £600,000 or less (it’s still to be confirmed if this will be lowered to £400,000 for Northern Ireland) as NI direct website states maximum lending value of £600,000
• Have a loan-to-value of between 80 per cent and 95 per cent
• It must be a capital repayment mortgage, and not interest-only.
• You still need to meet lenders’ criteria to get a mortgage, so you’ll have to have a good credit history and enough income to meet your mortgage payments. Government has also announced that people wanting to take advantage will be subjected to income checks and “stress testing” to ensure they can afford the new mortgages.
How do I get it?
Further information is expected imminently as the scheme has been introduced three months earlier than expected. It’s likely that you’ll apply to a mortgage lender that is offering a high LTV product as normal and the lender would take care of any work related to the scheme in the background.
Your home may be repossessed if you do not keep up repayments on your mortgage