What is Help to Buy - wasn't it available already?
There are two totally separate parts to the scheme, but the government has confusingly called them both 'Help to Buy'. To make it clear, let's call them Help to Buy 1 (new build) and Help to Buy 2 (all homes):
Help to Buy 1 - Was launched in April for those in England and Wales (last month in Scotland, but with a few slight differences) and is designed to encourage people to buy new build properties to help bring an end to the housing shortage. Here, if you put down a 5% deposit, the government gives you an interest free loan for 20%, repayable over 5 years - the rest is a mortgage.
Help to Buy 2 (all homes in the UK) - Now this is actually more a way of changing the mortgage market than offering specific products. The government is insuring lenders for 15% of the loan so if you only have a 5% deposit - as the government guarantees some of the mortgage, more lenders are more likely to offer deals at this level. The idea is there are many people struggling to put a 10%-20% deposit down that's needed, but who can afford the repayments.
Again this is available for repayment mortgages on homes worth up to £600,000. Lenders should start putting mortgages out there now, though the insurance part won't work for them until January.
Can anyone get Help to Buy 2?
In practice you'll have to be buying a property - though you don't need to be first time buyers, this is very unlikely to work for those just wanting a new mortgage deal. There are still likely to be stringent credit and affordability checks done; so not everyone who on the surface fits the criteria will get it.
How cheap will these new mortgages be?
It's not yet known, but likely not very. You'll probably be getting mortgages in the 5%s for interest rates, which is still a lot more than those on smaller deposits will pay. So much so, that it may be worth getting a short mortgage that then reverts to the lenders standard rate, as that could be cheaper.
To put this in context, right now you can get a 2-year fix with a 10% deposit at 4%, 20% at 2.4%, 35% at 1.9%. Each 1% you cut on a £100,000 mortgage saves you £60 a month (about £700 a year).
On a five year fix it's 10% at 4.4%, 15% at 3.8% and 35% at 2.4%. These are substantially cheaper.
Should I fix?
A fixed rate mortgage is well... er... fixed. Judging whether a cheap fix will beat a cheap discount is normally tough without a crystal ball (and they cost a lot more than a house). Yet far more important is how key certainty is for you. If you couldn't afford a rate rise, then a fix gives you that certainty. Even if in hindsight it was more costly, that's still worthwhile.
However, right now you can get fixes for little more than variable rate deals (those that move with interest rates) and it's unlikely base rate can drop much more so it's less of a harsh decision (little is certain though).
Is it worth getting one of these Help to Buy mortgages?
The smaller your deposit, the bigger your mortgage payment, so ensure you can afford it. Don't push yourself to the brink of affordability just to get a property. Buying a property which you can no longer afford to repay and getting it repossessed later is far worse than renting.
When it comes to looking at the risk factors, remember interest rates aren't just low right now, they're 2% lower than the prior 200-year historic low.
So ask yourself what you would do if UK rates and your mortgage jumped by 4%. Could you still afford to repay? Use this mortgage calculator to find out.
Many, especially younger people, think they must move heaven and earth to buy a house. Don't listen to TV property pushers. Ensure you're financially stable before embarking on such a big commitment - or you could lose the house.
How do I get help getting a mortgage?
This is one of those areas where I'm in favour of getting independent advice. You want a mortgage broker to do this, but do check they are whole of market (ie, able to search across the entire market to get a deal) - just ask them this.
They will then help you work out what both the best and the most attainable deals are. Some are fees-free and just effectively take a fee from the lender - others will charge you - but ensure they only do this if you get a mortgage through them (most work this way).
Yet even then there are some deals brokers don't offer, banks like HSBC and Chelsea Building Society offer direct only deals and these can be super cheap though difficult to get, so it's worth checking those too - they are listed on sites such as Moneyfacts and the Money Advice Service.