Portfolio - Issue 5 - Autumn 2018 - Page 60



NEWS
First steps on the property ladder Help to Buy mortgages and ISAs
Jane Fiddes, Samuel Phillips Law Firm
First time house buyers with only a 5% deposit can take their first step
up the housing ladder by choosing a Help to Buy equity mortgage.
The Government’s agship scheme will lend you up to 20% of the cost of your
newly built home (40% in London), so you’ll only need a 5% cash deposit and a 75%
mortgage to make up the rest. The full purchase price must not exceed £600,000.
For example:
Purchase Price
HTB mortgage
Mortgage
Deposit
£200,000
£40,000
£150,000
£10,000
The government loan is interest free for the rst ve years. In year six you’re
charged interest of 1.75% of the loan’s value and thereafter payments increase
every year at 1% above ination.
For example:
Interest payable
Year 6
Year 7
Purchase
Price
£200,000
Interest
on 20% HTB
contribution
Monthly
interest payable
£3535
(£3500 plus 1%)
£707
(20% of £3,535)
£58.92
(plus ination)
£3,500
(1.75% of
Purchase Price)
£700
(20% of £3,500)
£58.33
The loan must be repaid either when the property is
sold or when the mortgage period ends.
It is also important to note that the Help to Buy
mortgage is not xed to the amount of the initial 20%
contribution. When you come to repay the mortgage,
you will have to pay 20% of the current open market
value of the property. However, any improvements
you have made to your property will be disregarded
when assessing the new market value, provided you
sought written consent from Help to Buy before
undertaking the works.
The mortgage will run for 25 years unless it is
repaid earlier. The Help to Buy scheme, introduced in
2013, has been extended to 2021. If you are a rsttime buyer interested in buying a new build property,
talk over Help to Buy with your solicitor or adviser
alongside other mortgages on oer.
HELP TO BUY ISAs
If you have saved at least £1,600 in a Help to Buy ISA
when you buy your rst home the government will
give you an extra 25 per cent tax free boost – up to
£3,000 per account.
You can save up to £200 a month into a Help to
Buy Isa. It also oers instant access and attractive
rates, so it’s worth looking into – and the added bonus
of 25% towards your rst house is a real benet.
It’s important to get in touch with your solicitor if
you want to claim the bonus, because they need to
claim it at least ve working days before your
completion date and require a closing statement
conrming the closing balance and a completed First
Time Buyer Declaration which they will send to you.
It’s up to you to close your ISA and provide these
documents to your solicitor.
Over 169,000 rst time buyers have used a Help to
Buy mortgage over the past ve years to buy a new
build house, and the Help to Buy ISAs are also popular.
Find out more by talking to your solicitor or
mortgage adviser to make sure Help to Buy suits your
needs.
Samuel Phillips is one of Newcastle’s leading law
rms. It has a wealth of experience in dealing with the
purchase of new builds and is the recommended
solicitor for major developers in the North East.
Jane Fiddes is Head of Residential Property
at Samuel Phillips Law Firm,
18-24 Grey Street, Newcastle upon Tyne.
Email: janeddes@samuelphillips.co.uk
Tel: 0191 2328451
60
PORTFOLIO MAGAZINE

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