Help to buy equity scheme questions

Mr_j_3

Hello I'm looking for advice regarding the help to buy equity scheme, we are looking at a new property purchase & this scheme seems to good to be true !

The property is a new build & I've got approx £100k equity once my present property has sold, the new build is £280k & the scheme reads I can borrow 20% via the scheme £56k with no payments until year 5 the mortgage with the lender being £124k.

Is this correct ?

Do the help to buy mortgages enable overpaying ?

Are the mortgages a higher % rate than normal mortgages on offer with the same lender ?

Am I better off getting a normal mortgage ?

Is it too good to be true as others say ?

What are the downsides with the scheme ?

Plus any other knowledge would be greatly appreciated before I meet the builders approved Broker & see what they say !

Thanks

kingstreet

Yes, you can take an equity loan of 10% or 20% of the purchase price. You must borrow 25% of the purchase price as a minimum.

It is interest-free for five years. In year six you start to pay fees, which are 1.75% of the amount you borrowed, increasing each year. If inflation runs at 5%, the payment in year seven will be 1.87%, in year eight 2.0% and so on.

If the mortgage product you choose allows overpayments, you an overpay.

Products/rates vary from lender to lender. You will have to make your own comparisons.

Only you can work our if you will be better off with a "normal mortgage" although the mortgages is not different to any other. It is the equity loan which is the unusual component here.

When you repay, you repay the percentage of the property value at the time, so you will pay more if the property value increases. You can repay in upto two chunks, either the full 20%, or two lots of 10%.

http://www.homesandcommunities.co.uk/sites/default/files/our-work/help_to_buy_buyers_guide_sept_2013.pdf