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| Version 2 | Version 3 |
|---|---|
| Help to Buy scheme: questions and answers | Help to Buy scheme: questions and answers |
| (14 days later) | |
| What is the Help to Buy scheme? | What is the Help to Buy scheme? |
| Help to Buy will take two forms: one part offers buyers an interest-free loan from the government; the other involves the government providing a guarantee to underpin a borrower's mortgage. | Help to Buy will take two forms: one part offers buyers an interest-free loan from the government; the other involves the government providing a guarantee to underpin a borrower's mortgage. |
| Both will be available for homes worth up to £600,000 and there will be no restriction on how much applicants need to earn in order to qualify. | Both will be available for homes worth up to £600,000 and there will be no restriction on how much applicants need to earn in order to qualify. |
| How will the loan scheme work? | How will the loan scheme work? |
| The interest-free loan will be offered from 1 April 2013 and will be limited to people who want to buy a new-build property. It is similar to the existing First Buy scheme, but this time it is available to existing homeowners as well as first-time buyers. | The interest-free loan will be offered from 1 April 2013 and will be limited to people who want to buy a new-build property. It is similar to the existing First Buy scheme, but this time it is available to existing homeowners as well as first-time buyers. |
| Borrowers will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow a further 20% on an interest-free basis from the government. The biggest loan available will be £120,000. | Borrowers will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow a further 20% on an interest-free basis from the government. The biggest loan available will be £120,000. |
| The state-backed loan must be repaid when the property is sold. It can be repaid earlier, but only if the mortgage is paid off at the same time. | The state-backed loan must be repaid when the property is sold. It can be repaid earlier, but only if the mortgage is paid off at the same time. |
| After five years it will attract an interest fee of 1.75%, which will rise annually by the RPI rate of inflation plus 1%. | After five years it will attract an interest fee of 1.75%, which will rise annually by the RPI rate of inflation plus 1%. |
| The Treasury says the £3.5bn scheme will help up to 74,000 buyers. Anyone who is interested in using it needs to contact a participating housebuilder or HomeBuy, which oversees affordable housing schemes. | The Treasury says the £3.5bn scheme will help up to 74,000 buyers. Anyone who is interested in using it needs to contact a participating housebuilder or HomeBuy, which oversees affordable housing schemes. |
| How will the guarantee scheme work? | How will the guarantee scheme work? |
| This part of the scheme, which will be available from January 2014, will help you buy either a new or existing property. Again, you will need to raise a deposit of at least 5% but no more than 20% (if you have a bigger deposit, you should have a good choice of mortgages anyway). | This part of the scheme, which will be available from January 2014, will help you buy either a new or existing property. Again, you will need to raise a deposit of at least 5% but no more than 20% (if you have a bigger deposit, you should have a good choice of mortgages anyway). |
| The government will provide the lender with a guarantee for up to 15% of your loan, allowing it to offer a mortgage even though you have a small deposit. More details will be announced later in the year. | The government will provide the lender with a guarantee for up to 15% of your loan, allowing it to offer a mortgage even though you have a small deposit. More details will be announced later in the year. |
| Has the government done enough to iron out confusion? | Has the government done enough to iron out confusion? |
| No. The mortgage guarantee scheme remains unclear, for instance. As well as not knowing who will qualify, we don't know how much lenders will be charged to use it. | No. The mortgage guarantee scheme remains unclear, for instance. As well as not knowing who will qualify, we don't know how much lenders will be charged to use it. |
| A lack of clarity might be expected of a policy that does not come into place until next year and has not been through a consultation process. | A lack of clarity might be expected of a policy that does not come into place until next year and has not been through a consultation process. |
| However, the Treasury does seem to have been caught out by some of the questions raised by its own document outlining the scheme. | However, the Treasury does seem to have been caught out by some of the questions raised by its own document outlining the scheme. |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| HSBC | HSBC |
| Nationwide |