With the Help to Buy scheme you could own 100 per cent of a property with just a 75 per cent mortgage and you only need to find a 5 per cent deposit. The initiative was introduced to help homebuyers get on or climb the property ladder. It's open to both first-time buyers and home movers provided they can pay a 5 per cent deposit on homes valued up to £600,000.
There are two options to choose from with Help to Buy - an equity loan or a mortgage guarantee.
A Help to Buy equity loan is only available to people who are buying a new-build property. With this option the government lends you 20 per cent of the overall cost of a property, meaning you will only need to find a 5 per cent deposit and apply for a 75 per cent mortgage.
For example, a property valued at £200,000 would involve:
Buyer's 5% deposit = £10,000
Government's 20% loan = £40,000
75% mortgage from lender = £150,000
You will not be charged any interest on your 20% loan for the first five years but you are not able to sub-let your home and it must be your only property.