Help to Buy is an affordable scheme introduced by the government to help first time buyers onto the property ladder to purchase a new build property in England. As with anything new, investigating the market and mortgage options available to you is key, prior to looking for your ideal property.
Here at Dunham McCarthy we can help you with every aspect of the home-buying process, from arranging your mortgage and equity loan under the scheme, to guiding you through the House Buying Process.
Find the best mortgage product
We search the major high street lenders like HSBC, Nationwide and Santander and many more, as well as smaller specialist lenders, all to get you the best deal.
Arrange your equity loan
In addition to the mortgage you arrange with a bank, you also need to apply for an equity loan from the government once you reserve a New Build property. We will help guide you through the complexities of the application process.
Help you negotiate
Negotiating a price is a balancing act, you want the property, but you also want the best price - let us help you achieve both.
Recommend solicitors
Choose a slow or disorganised lawyer and you could loose your property, because we deal with so many property transactions each month, we know which solicitors are fast and efficient.
Coordinate your survey and related checks
Mortgage valuations, homebuyers reports and structural surveys, we can help you avoid any nasty surprises.
Access exclusive mortgage products
In addition to thousands of mainstream mortgage products, we have access to many exclusive products that aren't available elsewhere.
Co-ordinate the home-buying process
Once we have found you the right product, we provide advice and guidance throughout the whole process from start to finish.
Arrange life insurance and sickness protection
Let us explain your insurance options to make sure that you and your family are fully protected in every eventuality.
How much of a deposit is required?
The Help to Buy equity loan scheme requires a minimum of a 5% deposit contribution from you as the buyer. You would then borrow up to 40% (if you are purchasing in London) or 20% (if you are outside London) from the government in the form of an equity loan.
How long do you need to have been working?
We can help you find a mortgage even before you have started work (provided you have signed a contract), although generally mortgage lenders prefer to see you, with the same employer, for a period of 3 to 6 months. This is because lending money is always a risk and mortgage providers want to reduce the risk, as much as is possible, by seeing that you can demonstrate a degree of financial and employment stability.
For those who are self-employed, or employed by their own limited company, things are significantly more complex. In the main lenders would want to see profitable accounts for the last couple of years.
How long will my mortgage term be?
Your equity loan will run for 25 years. You will repay the equity loan either when you sell the property or reach the end of the loan term. Alongside the equity loan you will also arrange a repayment mortgage from a bank. This can run for up to 35 years (some lenders allow you to borrow over 40 years). The longer the mortgage term, the lower your monthly payments will be however you will pay more interest over the long term.
How much money can you borrow?
Every mortgage provider has their own will lend criteria, though Help to Buy also have affordability stress testing that you also have to meet. Under the Help to Buy scheme you can borrow up to 4.5 times your income as a maximum from the bank and then make up the remainder of your purchase in addition using your deposit and the equity loan. They also insist that your ‘debt to income ratio’ is below a certain amount to ensure the loan remains affordable.
It’s important that you give as much consideration to your outgoings as you do about how much you earn and how much you can possibly borrow. You need to weigh up the quality of lifestyle you wish to achieve and what’s important to you.
What costs can you expect?
Product fee
From £0 to £2000+ it varies from product to product, it can sometimes can be added on to your overall mortgage borrowing.
Booking fee
This is sometimes charged when you apply and is not usually refundable even if your application fails. Costs vary from around £100 to £250.
Valuation fee
The mortgage provider will instruct a survey to provide a realistic valuation of the property. This is done to ensure the property is worth the asking price and the amount you wish to borrow. This can cost between £150 to £300.
Telegraphic transfer fee
The cost of the mortgage provider to send the loan money through to your solicitor. This usually costs £25 to £50.
Mortgage account fee
This is an administration fee from your lender for setting up your mortgage. This usually costs around £100 to £300 and is actually paid when you repay your mortgage in full.
Lending Charge
Occasionally, a mortgage provider might levy a fee based on a percentage of the money borrowed; this can be around 1.5%. Again, gathering information and due diligence is key since knowing this might dictate that you pay a higher deposit!
Stamp Duty
This will vary depending on your circumstances and the value of the property being purchased. It also changes regularly so speak to your advisor to properly calculate this figure.
Buildings Insurance
Mortgage providers will insist that you have a buildings insurance policy in place in order to protect the asset (your home) that they are lending against. This can be around £150 a year, although its usually combined with some form of contents insurance pushing the figure to around £300 (depending on your circumstances).
Life & Critical Illness Cover
It is also essential to have insurance to ensure that your financial commitments, such as the mortgage, is covered should you die or be unable to work. Again, how much you pays depends upon your own personal circumstances, assets, wealth and health.
Survey fee
This looks at the condition of the property and lists work that needs to be done to maintain the value and safety of the property. It also looks at possible external influences on values such as nearby developments or such things one can’t see as former underground mines, possible rights of access. Expect to pay around £400 upwards for this kind of report.
Solicitor / conveyancing fees
For all the legal work (obtaining local reports, liaising with the sellers’ solicitor and your mortgage company and for expediting the financial transactions) expect to pay between £850 and £1,500.
Moving costs
As a first- time buyer it might well be that you don’t have a huge amount of belongings. In this case, you could save yourself a fortune by moving yourself and enlisting the help of friends, since a removal firm travelling around 50 miles could cost between £1,000 to £1,200!
Should you go to your bank for a mortgage?
With thousands of mortgage products out there, the chances that your bank offer the most competitive deal available are very slim – for this reason we do not recommend going to your bank for a mortgage.
Where is it best to go for a mortgage?
A broker who can look at a wide range of banks and lenders is always your best option and this combined with their specialist knowledge and advice will ensure that you get the product that’s perfectly suited to your own personal requirements.
Dunham McCarthy Mortgages is one such specialist. We can also help you with other requirements such as life insurance, critical illness cover and income protection – acting very much as a ‘one stop shop’ adviser and provider for all your mortgage and property needs.
