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Help to Buy mortgage scheme – should I apply now?

Banks have started launching their mortgages under phase 2 of the Help to Buy scheme - so what do they cost, which should you choose and when's the best time to sign up?

How much did it cost to get a mortgage before Help to Buy?

If you only had a 5% deposit before Help to Buy launched the most competitive widely available two-year fixed rate mortgage had an interest rate of 5.95%. If you had a 10% deposit, the best rate was 3.54%, with a fee of £1,675. (Statistics via financial information service Moneyfacts).

How much will I have to pay for a deposit with Help to Buy?

According to property website Zoopla, buyers with a budget of £220,000 will need a deposit of less than £10,000 to get on the property ladder with a Help to Buy mortgage.

Zoopla said to get a £322,000 home in London (the most expensive part of the country) buyers would need a deposit of  £16,000.

What’s the interest on a Help to Buy mortgage?

RBS and NatWest both have two-year, fixed-rate mortgages with interest rates from 4.99% with a 5% deposit and no fee. Halifax will launch a mortgage with an interest rate of 5.19% with a £995 fee if you can put up a 5% deposit.

How many banks have yet to announce their rates?

HSBC has said it will join the scheme later in the year and Virgin Money and Aldermore say they will launch their Help to Buy mortgages in January. Other banks that have said they will join the scheme include Lloyds Banking Group and RBS.

Is now the best time to get a Help to Buy mortgage?

Maybe not, it’s probably advisable to wait for a while until all of the banks have launched their mortgages, so that you can compare them and shop around for the best price. A lot of the banks will launch their schemes in January, so that could be a good time to start looking at your options.

Is Help to Buy now the best way to get a mortgage?

It depends on your budget – if you can afford to get a mortgage without Help to Buy you will have to put down a bigger deposit but it will be cheaper for you in the long run. If a deposit is within your reach it’s probably worth tightening your belt and making some sacrifices now rather than relying on a government guaranteed mortgage which could cost you more over the lifetime of the loan.

Read more housing news

‘We don’t want to be generation rent’ – a first time buyer’s perspective

Help to Buy – a pessimistic first time buyer’s perspective

Help to Buy – an optimistic first time buyer’s viewpoint

Help to Buy: when and how do I apply?

Second Stepper Blog Part 1: Decision time

Mates mortgages and other mortgage innovations

How the government can help you buy a home: Help to Buy

Mortgages made simple

Do I need a mortgage broker?

How do I choose a new area to live in?

Top Tips – things not to forget when viewing a property

How do I know I’m not paying too much?

Making an offer – and haggling over the price

Buying with a partner or friend – what to watch for

Leasehold v Freehold – what’s the difference?

What sort of survey should I have?

The legal side of buying a home explained

Should I do my conveyancing online?

How do I exchange contracts?

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