Help to Buy scheme ends, but alternatives remain available

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The government’s Help to Buy mortgage guarantee scheme ended on December 31, 2016, but there are still options available to help the homebuyer.

The Help to Buy mortgage guarantee scheme was designed to help homebuyers who could not afford a large deposit for a mortgage. The scheme covered mortgages with deposits of between 5% and 20% and guaranteed to reimburse the mortgage lender if the borrower defaulted in the mortgage. It was launched in 2013 with the aim to increase the number of low-deposit mortgages.

Though the scheme has ended, there are many mortgage deals available with a deposit of just 5%. Consumer organisation Which? reported in a December 2016 article that there are currently 257 of these deals, and 479 mortgage deals available with a 10% deposit.

The government’s Help to Buy equity loan scheme is still active. The government will lend up to 20% of the value of a property, with the borrower expected to have a 5% deposit. A mortgage will then be needed to cover the other 75% of the purchase price. This scheme is only available for new build property.

Shared ownership deals are available through housing associations where a mortgage covers between 25% and 75% of the value of the home, with rent paid for the remaining share.

For every type of mortgage, it is also advisable to take out mortgage protection insurance that guarantee mortgage payments if the borrower is unable to work because of illness of an accident.

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