New Help to Buy mortgages launched

Growing numbers of lenders are launching Help to Buy mortgages, increasing the options available to buyers of new build properties.

Accord is the latest lender to enter the Help to Buy mortgage market, offering a range of fixed rate deals for homebuyers looking to borrow 60% or 75% of the property value. The deals, which are only available through brokers, come with a free standard valuation and £500 cashback.

David Hollingworth, spokesman for L&C said “Given that Help to Buy plays a key role in many buyers’ plans, it’s welcome news that more lenders are launching into the sector. The more lenders offering Help to Buy, the better the range of product options for homebuyers which can only enhance an already competitive market.”

How Help to Buy works

The Help to Buy equity loan was introduced five years ago to help those with a limited amount of savings to buy a new build home. Under the scheme, you only need a deposit of 5% of the property price. The government will then lend you a further 20% interest-free for the first five years, or 40% if you’re buying in London. After the five-year interest-free period finishes, interest will initially be charged at a rate of 1.75%, increasing every year by the rate of inflation as measured by the Retail Prices Index (RPI) plus another 1%.

Help to Buy equity loans can only be used to purchase new build properties costing up to £600,000 in England. The scheme is currently due to finish at the end of 2021. There are similar schemes in Wales and in Scotland although the eligibility criteria varies between schemes.

Find out more about how Help to Buy works in our Guide to Help to Buy.

Remortgage options for Help to Buy homeowners

Remortgage options for Help to Buy borrowers who have reached the end of their current deal, want to switch to a new deal but keep the equity loan in place can still be quite limited. Thankfully more choice is emerging and more lenders are now offering Help to Buy remortgage deals.

NatWest is a recent example of a lender developing a range of Help to Buy remortgage products, designed for homeowners who need a new deal but aren’t planning to pay off their equity loans. The deals come with £500 cash back, and borrowers can choose from lower rate deals with arrangement fees, or fee-free deals at higher rates.

They join a number of other lenders who are already offering Help to Buy remortgage deals such as Skipton BS, Leeds BS and Barclays. Seek professional advice to help choose the best Help to Buy mortgage or remortgage deal to suit your needs.