What’s the difference between the Help to Buy Schemes? Read our latest blog to find out!

Published: May 2017

What’s the difference between the Help to Buy schemes? Click here to find out!

If you’ve heard about Help to Buy before you might be surprised to hear that there isn’t just one ‘Help to Buy scheme’, in fact there’s three! Help to Buy is the umbrella term for the Equity Loan, Shared Ownership and Rent to Buy options available.

Here’s a quick look at the key differences between them.

Help to Buy Equity Loan allows you to purchase a brand new home from participating developers with a smaller deposit and mortgage than on the open market. You can contribute a 5% deposit, or more depending on savings, get a mortgage for 75% of the property’s full value and the government will loan you the remaining 20% difference. This loan is interest free for the first 5 years, aside from a £1 monthly management fee, and you’ll have up to 25 years to pay it back, depending on the term of your mortgage.

Unlike other Help to Buy schemes you can go direct to the developer or the site’s sales office to begin the process if you see a property you fancy, and you may even find you’ll have a wider choice of plots to pick from when selecting your new home.

Shared Ownership properties are marketed for a particular share from 25% to 75%. If you were purchasing a share of 50% for example your deposit and mortgage would only need to cover the purchase of this initial share. The remaining 50% you would pay rent on to the Housing Association that owns the remaining unpurchased share. Unlike the Equity Loan however you can also find Shared Ownership available on older properties. This is where an existing shared owner is selling their share in the home and is known as a Shared Ownership Resale.

In most cases you are able to purchase more shares of the property after the initial purchase. Essentially the higher your share in the property the less rent you pay to the Housing Association.

Rent to Buy is split into two schemes; Intermediate Rent and Rent to Buy. Both are discounted rent schemes meaning your monthly rent is 20% cheaper than standard rental properties. The big difference is that with Rent to Buy the money you save on the rent can then used to purchase that property, often on a Shared Ownership basis, whereas with Intermediate Rent the money being saved is to help you purchase a different home.

This should give you a good idea of the key differences between the Help to Buy schemes. For more information on any of the schemes please visit the Downloadable Guides section of our website. As always if you have any more questions please give us a call on 0800 456 11 88 or email us at info@helptobuysouth.co.uk.