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Help to Buy

If your client is looking to purchase a property in England, please be aware that the Help to Buy Shared Equity scheme stopped accepting new applications on 31 October 2022.

We offer mortgages as part of the UK Government’s Help to Buy Shared Equity schemes, which was formerly available in both England and Wales, but is now only available in Wales. The scheme is designed to help buyers who are looking to purchase a new-build property and meet the eligibility criteria. We are unable to support help to buy remortgage customers.

The schemes are available to buyers who are looking to purchase a new-build property and whilst they have the financial means to maintain their mortgage, they nevertheless experience difficulty in purchasing their desired property because of their inability to raise privately the required deposit. Platform’s participation in the schemes will therefore assist prospective purchasers by allowing them to take out also a Help to Buy Equity Loan by way of a second charge.

Submitting an Application

Before submitting a Help to Buy mortgage application, you must ensure your client has obtained the Authority to Proceed (ATP) document from their local Help to Buy Wales Agency.

All applications are subject to The Co-operative Bank for Intermediaries standard lending criteria, along with the following requirements:

  • Minimum applicant deposit of 5% of the purchase price is required (excluding builder incentives).
  • Builder incentives are allowable up to 5% of the purchase price and must be declared on the UK Finance Disclosure of Incentives Form.
  • Gifted deposits are acceptable providing that the deposit is being funded by a non-repayable gift from a family member. Declarations will be required.
  • Maximum Loan to Income of 4.49.
  • As a responsible lender, The Co-operative Bank for Intermediaries will assume a fee of 3% of the total Help to Buy Equity Loan as a monthly financial commitment.
  • The application must pass the affordability check, taking into account the Help to Buy Equity Loan.
  • The Co-operative Bank for Intermediaries online affordability calculators have been updated to support Help to Buy lending criteria (the outcome does not constitute a lending decision).
  • Minimum lease term of 250 years on houses and 125 years on flats, as well as no onerous clauses in ground rent increments.
  • The applicant(s) must live in the new-build property as their main residence and must not own another property.

One free valuation accepted per application, per customer, when using our recommended surveyors.

If the mortgage offer expires

The Co-operative Bank for Intermediaries mortgage offers are valid for 6 months from the date of application. This should align with the expectations of when the development will be completed and the property ready to complete. However, if there is an unexpected delay with construction and the offer needs to be re-issued, this can be considered as follows:

  • A revised offer can be issued for a further 3 months.
  • The customer needs to sign a new declaration form confirming their circumstances haven’t changed.
  • An up to date payslip will be required.
  • If the mortgage was at the maximum term for age or lending into retirement at the point of application, you are required to call The Co-operative Bank for Intermediaries to discuss revised term requirements.
  • You can upload documents via Click and provide any further information via Ask Us in the usual way.
  • A new credit search will be completed by The Co-operative Bank for Intermediaries and any changes to the customer’s credit file may affect the ability to extend.
  • The Co-operative Bank for Intermediaries will confirm that the property valuation hasn’t changed.
  • The Co-operative Bank for Intermediaries can re-offer on existing products even if they are withdrawn. If you want to change product you can complete and upload a Post Application Advice Submission form from the website.

Porting

The Help to Buy mortgages have a bespoke range of products. These products are not portable as the scheme finishes, and the equity loan needs to be repaid upon either sale of the property or at the end of the mortgage term. Any ERC applicable to the product would need to be paid if the mortgage is redeemed within the ERC period.

Product Switching

At the end of the initial product period, existing Help to Buy specific products may be available for your clients to switch onto.

If your client repays the equity loan during the mortgage term, at the end of the existing product period, they would then be able to select a product from the mainstream range with all the standard conditions, including the ability to port.

Additional Borrowing

The minimum equity loan repayment is 10% of the market value at the time of paying off the loan. The equity loan must be repaid upon either sale of the property or at the end of the mortgage term.

If your client has a Help to Buy mortgage and is interested in applying for additional borrowing they will need to contact us directly.

Your client can redeem the equity loan whenever they want to, however, they must have completed the mortgage at least 6 months earlier if they wish to take out further borrowing on their mortgage. Any additional borrowing to repay part or all of the equity loan will be subject to status and The Co-operative Bank for Intermediaries lending criteria at the time and will require a re-valuation by The Co-operative Bank for Intermediaries. Your client must have spoken to the Help to Buy agent/Help to Buy Wales Agency and gained an Authority To Proceed prior to approaching The Co-operative Bank for Intermediaries with the further borrowing request. The ATP will need to be provided at the point of application.

Minimum further advance is £5,000 or 10% of the market value whichever is the higher.

New-build LTV restrictions in place for the first two years – Houses 85% LTV and Flats 75% LTV. After 2 years, standard criteria applies.

Any further lending on the mortgage would require permission of the Help to Buy Agent/Help to Buy Wales Agency and will likely be sanctioned on the basis of repayment initially of the HTB equity loan.

A solicitor will be required to act on behalf of your client and The Co-operative Bank for Intermediaries in repayment of the equity loan.

How does it work?

With the Help to Buy Equity Loan Scheme, your client requires a deposit of at least 5% of the full purchase price. The government then provides your client with an Equity Loan of up to 20% of the cost of the new-build home, interest free for the first 5 years. After 5 years your client will have to pay the interest on the Equity Loan.

The scheme is administered by Local Help to Buy Agents who assess and approve all applications.

For more information (including advice on fees and paying back the loan) go to:

https://gov.wales/help-buy-wales/