Save, make, understand money

First-time Buyer

Help to Buy: the latest facts and figures

Joanna Faith
Written By:
Joanna Faith

We provide an update on all you need to know about the initiative.

It has been three months since the government officially launched its Help to Buy scheme.

The initiative allows people to apply for a government-backed mortgage with as little as a 5% deposit.

The scheme works by offering lenders the option to purchase a guarantee on mortgages where a borrower has a deposit of between 5% and 20%. The government hopes this will encourage lenders to increase the availability of high loan to value products.

Since launch the controversial scheme has triggered over £1bn of new home loans, according to David Cameron.

Here, we provide an update on the key facts.

Which lenders are offering Help to Buy mortgage guarantee products?

Royal Bank of Scotland, NatWest, Halifax, Bank of Scotland, HSBC, Virgin Money, Santander, Aldermore and Lloyds Banks all offer products.

Santander launched its first products on Thursday 9th January, while Barclays launches its products on Tuesday 21st January.

OneSavings Bank has confirmed it plans to launch products using the scheme in 2014.

The Post Office has also announced plans to join the scheme but has not revealed any information about launch dates or rates.

This leaves Nationwide as the only ‘big 6’ lender yet to announce its participation in the scheme.

What products are available under the Help to Buy scheme?

RBS, which includes the NatWest brand, offers a two-year fix at 4.99% and five-year fix at 5.49%, up to 95% LTV. Both products are fee-free.

Virgin offers a 95% LTV two-year fixed rate at 5.29% and equivalent 90% LTV fix at 4.29%. Three-year fixed rates are available at 5.39% for 95% LTV and 4.69% for 90% LTV.

Aldermore offers two-year fixed-rate products at 4.98% for mortgages with a loan-to-value ratio of up to 90%, with a rate of 5.28% for mortgages with a loan-to-value of up to 95%. There is a £999 fee on both.

Lloyds Bank offers a fee-free two-year fix available at 5.59% for Lloyds Bank current account customers and 5.79% for others. Another two-year fix, with a £995 fee, is on offer at 5.19% for existing customers and 5.39% for those without a Lloyds current account.

Santander joins the scheme on 9th January offering a range of mortgages, up to 95% loan to value.

How do I apply for a Help to Buy mortgage?

The mortgage guarantee scheme works like any normal house loan. Borrowers apply for a mortgage through participating banks and building societies or through a mortgage broker.

To qualify for the mortgage guarantee scheme, you must pass lender affordability checks and have no history of difficulties in meeting debt payments.

What are the scheme’s key rules?

All types of properties are eligible as long as the purchase price is £600,000 or less. The property must be located in the UK and lenders are only able to offer residential repayment mortgages, no interest-only or buy-to-let deals are allowed.

Borrowers must sign a declaration stating they have no interest in any other property to proceed with a Help to Buy mortgage. The scheme is not limited to first-time buyers and includes a remortgage element, intended to help mortgage prisoners.