Understanding How The Help To Buy Calculator Work
To understand whether the help to buy calculator works we need to understand what’s gone on before and how it works. The help to buy scheme was started to help the struggling first time buyers to get a foot on the housing ladder back in April 2013. The help to buy scheme is expected to last until 2020 and is available in England. There are similar scheme in Wales called Homebuy scheme, New Supply Shared Equity(NSEE) in Scotland and the Co-ownership scheme in Northern Ireland.
Gone are the days in the mid 1990’s when you could buy a house with a 5% deposit. Then for example you could obtain a Northern Rock 120% mortgage over 30 years and move in within four or five weeks. Everything collapsed 2008 when the recession started. Before the help to buy scheme was introduced first time buyers needed a 25% deposit and home-movers with less than 25% equity from the sale of their homes were also unable to get a remortgage.
The mortgage market was really in limbo. The bank of Mum and Dad was founded by those parents who could afford to help their own children. The deposits that parents were able to provide came from savings, from parents with sufficient equity in their own homes to remortgage or parents willing to stand as guarantor for the money.
Help To Buy Calculator Further Explained
For the next five years house sales stumbled along until the present conservative government introduced the “help to buy scheme”. Now, first time buyers and home-movers only needed to find a 5% deposit instead of a 25%. The government would fund and guarantee the 20% still needed to make the mortgage calculations work. To further encourage new homeowners to come forward the help to buy scheme would be interest free for the first five years.
After the five years the help to buy participants will be charged 1.75% on the 20% outstanding which will rise with inflation and does not need to be paid back until the property is sold. Of course they can remortgage at any time in the future and repay the 20% equity back to the government. Other benefits of the help to buy scheme means that you can borrow up to £600,000 and anyone with a 5% deposit who is able to meet the lending criteria for a mortgage can use the scheme.
The Help To Buy Calculation Works Like This
In order to obtain a ‘Help to Buy Scheme’ you will need to save up enough money to make the calculations work, you will need money for the following costs:
Start adding up with the “Help to Buy Calculator” now!
- A 5% deposit required
- Solicitors’ fees which will include Search fees, Legal costs, Stamp duty and telegraphic transfer fees
- Mortgage Lenders Arrangement set-up fee, charged upfront by the lender to buy the mortgage product or interest rate
- Mortgage set-up fees – some lenders will charge a mortgage booking fee
- Property Valuation Fee charged by the lender to check your property is worth the mortgage
- Any Surveyors fees (to check for structural defects in property)
- Moving costs
- and you need to be able to afford the new monthly mortgage payments, the council tax,etc.
Don’t turn off the help to buy calculator yet as there are more costs. Keep the help to buy calculator running as the costs do not stop once you have bought your new home. Because you will probably need to erect a fence, lay grass, buy curtains, carpet through-out the house, fit curtain rails in all the rooms, new light fittings and the list goes on and on.
I am sure by now you have a better idea of how the help to buy calculator works and whether or not you can afford a new home.