Bad credit and its effects

by Adam on December 17, 2015

Using credit cardsMany people find the option of purchasing items on credit very attractive.

This can be very helpful in certain circumstances. For example ‘buy now pay later’ enable people who have no free cash to buy larger items such as sofas or electrical goods to get the items right away without paying for them straight away, you would pay for them at a later date or the option is often there to pay it in instalments over a set period. These payment plans can be great as long as you stick to the payments or don’t forget that you need to pay back the initial amount by the set date. If you miss payments or fail to pay the full amount on time it’s easy for the payment amount to rise substantially in a short amount of time. There will be interest added and late payment fees. If you are going to go ahead and use one of these plans then you need to ensure you can make the payments or you could get into financial distress.

 It’s things such as the above that can affect your credit score. Having a poor history of reimbursing back your borrowings makes it more problematic for you to borrow in the future. This is why it is so important to keep track of everything and make your payment on time.

 Put simply bad credit is the consequence of making poor financial choices one after another. If you borrow money whether it’s a loan or store credit or credit card it will be assumed that you are going to pay it back one way or another. Whether it has been set up via monthly instalments or paying back the total by a set date. This was the condition that you were allowed to borrow the money/given the credit in the first place and it’s vital you stick to this agreement, otherwise your credit score will be affected. Furthermore not sticking to this means you will incur further fees. It is very important to only apply for a loan when there aren’t any other routes otherwise you risk putting yourself in a worse financial position. To put it frankly having a poor credit history deems you to be ‘untrustworthy’ by lenders as you aren’t someone who is seen to be a good person to lend to as it may be unlikely that you will make the repayments. Therefore you may not be someone they will allow to have a loan or credit or if you are approved you will have a much higher interest rate than someone with a good credit rating.

The best way to begin to get back on track is to make arrangements to pay off existing debt. It may take some time but you could eventually reach a place where you have a good credit rating once more.





Spending Review and Autumn Statement 2015 

by Adam on November 25, 2015

Today was a big day for people working in Financial Services, and for the clients that we serve.

The Chancellor has today delivered the Spending Review & Autumn Statement 2015. Whilst the speech set out his spending plans over the next 5 years, there were other announcements made including those relating to pensions and taxation. Here’s a summary and some comments by Jonathan Watts-Lay, Director, WEALTH at work, leading providers of financial education, guidance and advice in the workplace.


State pension

The Chancellor confirmed they will maintain the triple-lock (the higher of price inflation, earnings growth or 2.5%) and that the basic state pension will rise by £3.35, bringing it to £119.30 per week. However, if you are retiring on or after the 6th April 2016, the new single tier state pension will be no less than £155.65 and will depend on having 35 qualifying years of National Insurance contribution.  There will be a deduction for those who were contracted out of the Additional State Pension.

comments, In reality, not everyone will be eligible for the maximum amount of the new state pension. Therefore, it is important that you check your State Pension record and National Insurance contribution history early; if you have any gaps you may still be able to make up the difference. We urge everyone approaching retirement to make an enquiry to find out what they are going to receive. You can request a State Pension statement using a form called a BR19, which is available online or by calling the government helpline on 0345 3000 168.”


Some people plan to use buy-to-let properties to fund their retirement as an alternative to saving towards a traditional pension pot.  However the Chancellor has continued the theme, set in the summer Budget, of making such investments less attractive from a tax perspective.

In the summer the removal of the wear and tear allowance was announced. Previously, landlords of furnished properties could claim 10% of their rent as tax relief for wear and tear, but this is no longer the case. Instead, the allowance is being replaced by a system that only allows landlords to deduct costs they actually incur. Also, the tax relief landlords receive on their mortgage interest payments was to be cut from 40% or 45% to 20%.  Today it has been announced that the purchase of additional residential properties, such as buy-to-lets, will be subject to higher stamp duty, 3% above the current rates.  Additionally and under consultation, capital gains tax on the disposal of a second property will be required to be made within 30 days of the completion of the disposal as from April 2019.

Watts-Lay comments, “It is clear the Chancellor has targeted the buy-to-let market and is reducing the previous tax breaks. These changes may put off new entrants to the market who were relying on the tax breaks to make the investment viable. Although there are other considerations to take into account, I believe there are other more tax efficient and flexible methods of saving for retirement. Make sure that if you are still working you have maximised your pension savings on which valuable tax reliefs are available, depending on individual circumstances. Making use of generous ISA allowances also tend to feature high on most agendas and both spouses should utilise the annual tax free limits.”

Secondary annuities

The government will remove the barriers to creating a secondary market for annuities, allowing individuals to sell their annuity income stream. Further details on this measure will be set out, including the framework for the consumer protection package, in its consultation response this December.

Watts-Lay comments, “Once introduced, it could be good news – allowing individuals to sell the income they receive for a cash lump sum. However, the ‘sting in the tail’ is what value they are likely to be able to get, and in reality this may not be good.  In addition, caution is required because once the money has gone, it’s gone.”

Watts-Lay concludes, “It looks like the Government is waiting to respond to the pension tax relief consultation in the next Budget. High earners might want to consider making the most of the next few months in case higher rate tax relief is removed.”


WEALTH at work is a leading provider of financial education in the workplace. It provides a service which helps employees to understand how to maximise the value of their benefits by delivering financial education tailored to the needs of individual companies and of different employee groups within those companies. This can then be supported by online guidance and an advice service which allows, for example, the linking of company share schemes to pensions and ISAs, retirement income planning for retirees and specialist support and guidance for senior executives. For more information, visit


The changing face of personal loans

by Adam on November 19, 2015

autumn statementGeorge Osborne’s Autumn Statement is only days away, but few members of the public will be expecting too many early Christmas presents when he addresses the nation. Much of the circling opinion suggests it will be more a case of finding a place to plunge the axe, and with reducing the fiscal deficit being the main priority, working people won’t be holding their breath for much in the way of handouts or relief.

And the inevitable bitter aftertaste will no doubt centre on the extortionate cost of living facing Brits today. The Chancellor has rightly pointed out that the relationship between wage growth and inflation is as favourable as it ever has been at the moment, but it isn’t nearly enough to offset the concerns of a generation struggling to provide the life they imagined for themselves and their families – let alone climb aboard the housing ladder. Indeed, debt, rather than growing net asset value, is the reality facing many of us.

Consumer-friendly credit

On a positive note though, consumers can at least take solace from the fact that if turning to a helping hand is a necessity, the market for credit isn’t the overpriced minefield it once was. In fact, the combination of record-low base rates and an increasingly competitive landscape has created a perfect storm for an abundance of low interest loans.

The premier source of such improved competitiveness – and, by extension, improved value – has been the rise of alternative finance providers, with peer-to-peer lending (P2P) platforms in particular leading the way. Such online lenders conduct their business by matching money from those consumers willing to lend as an investment directly with those in need of a loan.

The chief selling point of such a model is its efficiency, with any middlemen or red tape eliminated in this most natural of interactions. The platform acts purely as a mediator, ensuring that controls are in place to ensure that only creditworthy applicants make the cut. But, other than a small admin fee for this service, they leave the resultant value to be enjoyed by both borrower and lender.

For the borrower, this means receiving a low-cost loan with a favourable APR, with the ensuing monthly repayments allowing the lender to benefit from returns on their money typically in excess of 5 per cent. And as a borrower, there are further advantages to be had too in terms of flexibility.

Loans can be taken out for a variety of purposes including debt consolidation, home improvements, car finance or holidays, and you also have a good degree of choice in both the loan amount (£1,000 to £25,000) and the loan term (1-5 years). Some peer-to-peer platforms such as Lending Works even offer the option to make overpayments or early settlements at no extra cost.

And it requires the minimum amount of input to set the ball rolling too, with an online application form usually needing no more than two minutes to complete. The approval process then takes no more than a solitary working day, and if the desired decision on the application is returned, a borrower can expect to receive the funds overnight. Quick, simple and affordable – just as a loan should be.

Loans that work for you

So while Wednesday’s Autumn Statement is unlikely to give you the lift you need with the festive season ahead, there is no need to feel too disheartened. Being debt free will always be the primary objective for all of us, but the perception of loans as some sort of financial straitjacket is fading. Instead, they can be a sensible way of making proactive decisions – with nothing more than reasonable repayment plans as a consequence.

Be sure to do your homework, and always check the fine print when perusing the offers from various lenders. But there are great deals to be had out there, and they aren’t all that difficult to find. The power, for once, is in the hands of the consumer.



5 Ways You Can Afford to Buy a New Car

by Adam on October 29, 2015


CarNew car sales in the UK are on the up this year, and the new 65-plate has taken UK car registrations to a September record. More and more people in the UK are buying new cars due to the array of offers and payment packages available.

For most, searching for a new car is an exciting time, but as it is arguably the second-biggest purchase after buying a house, it can also be very expensive.

So how can you afford to buy a new car?

Scrap your car for a new one

Scrapping your old car for a new one is a great way of getting a discount on the overall cost. The only scrappage scheme currently running is being offered by British automotive manufacturer Vauxhall, so if you’re after a brand new Vauxhall, you’re in luck!

If you scrap any old car, Vauxhall will give you £2000 off a new one, provided you have owned the old car for at least 90 days and you buy a new Vauxhall. There’s no upper age limit and you can scrap a car from any manufacturer, so if you have an old car lying around this is a really good deal to take advantage of.

Go electric with the Government Plug-in Grant

The Government Plug-in Grant encourages drivers to buy a new plug-in vehicle by contributing to the cost. For example, if you want to purchase a new electric car, you can apply for a grant to cover 35% of the cost, up to a maximum of £5000. The rules are slightly different for electric vans; the grant will cover 20% of the cost up to a maximum of £8000. The ‘cost’ is the full purchase price you pay for the vehicle, including number plates, vehicle excise duty and VAT, though does not cover any extras such as delivery charges or first registration fee.

It’s not just applicable to electric cars (EVs) – the grant also covers plug-in hybrid electric vehicles (PHEVs), hydrogen fuel cell vehicles and other technologies.

The grant is currently expected to run until February 2016, though the grant will become tiered towards the end of 2015, so if you’re interested in making use of this offer, now is the best time to do it.

Sign up to a Personal Contract Purchase (PCP) scheme

The Personal Contract Purchase scheme is particularly useful for people who want to change their car every few years. This is an attractive option to many buyers as you are renting the car rather than buying it outright.

This scheme works when you pay a deposit of around ten per cent, agree to pay monthly instalments over a fixed period (usually three to five years) and defer paying a lump sum to the end of the contract.

At the end of the fixed term you have a choice either to pay this lump sum, give the car back, or sell it privately to clear the outstanding balance. If you do go for this scheme, though, it is vital that you maintain the cost and stick to the agreed millage to avoid incurring extra costs.

Apply for a Car Finance Deal

The most common way motorists can afford to buy a new car is through car finance and the number of deals available through manufactures, brokers and dealerships.

There are a number of car finance deals available and they all depend on the manufacturer and dealership, but you can expect to benefit from offers such as interest free, low monthly payments and no deposit deals. Because there are so many great offers right now, more and more finance packages are becoming available as the competition gets stiffer. In some cases you can also trade in your current car as a full deposit to keep monthly payments of a new car to a minimum.

Apply through a Bad Credit Car Finance Specialist

You may struggle to be accepted for car finance if you have suffered with a low credit rating. If you have had missed payments, defaults or arrears, a CCJ, suffered a bankruptcy or had an Individual Voluntary Agreement (IVA) you are eligible to apply for Bad Credit Car Finance.

If you apply for bad credit car finance with Stoneacre, they will initially do a soft search on your credit profile, meaning that it will not appear on your credit history. If you are eligible, you could also sign up to Black Box Car Finance. You will have a black box fitted on your vehicle, which will alert you every time a payment is due to avoid missed payments, thus helping to improve your overall credit rating. You should only do this if you can afford it, though, as if you do not pay your monthly payments, the black box can prevent the car from starting and it will be unusable.


mortgageIf you are in a position where you are selling a parcel of land that you own but still want to exercise some control over what the buyer will be able to do when they want to develop it and build, this would be one example of where you would use a restrictive covenant.

When you are searching for a property through a site like and others, you will almost certainly come across properties and development opportunities where some sort of restrictive covenant is in place.

You will find that restrictive covenants cover a broad range of issues and it doesn’t necessarily mean you can’t make alterations to a property that you want to, but it might mean that you have to get permission from a third party in order to do so.

Checking for restrictive covenants

The solicitor or conveyancer that you use to help you buy a new-build or older property should check to see if there are any restrictive covenants in place when they are reading through the deeds to the property as part of the conveyancing process.

It is vitally important that the conveyancer you use checks all of the documentation thoroughly and makes you aware of any issues that they discover which might affect your ability to develop or make alterations.

If they fail to do their job properly by making you aware of any restrictive covenants, once you sign the title deeds you will have confirmed your agreement to the terms contained within the title deeds, regardless of whether you were made aware of them or not.

Suddenly discovering that you have to tear down an extension to your property which breaches the restrictive covenant might seem an extreme example, but sadly there are plenty of examples of scenarios like this occurring.

This is why checking for restrictive covenants is such a critical aspect in the buying process.

Building regulations & boundaries

There is often some confusion amongst homeowners with regard to planning permission, which is actually entirely different from restrictive covenants.

A key point to remember is that obtaining planning permission from your local authority or obtaining building regulation approval are completely separate from applying for covenant consent, which you will have to do as well if you do not want to fall foul of any restrictions.

Another common scenario area where you might encounter the use of restrictive covenants is to settle a dispute with a neighbouring property.

Someone living next door to you might decide they want to erect a fence along their boundary line and it could well be that there is a restrictive covenant in place to prevent them from building it above a certain height.

Getting legal help

The time to find out about any relevant restrictive covenants is before you buy a property and of course it might be that you are affected by them if you rent and want to make some alterations.

The enforcement of these covenants is sometimes a complex affair and employing a professional conveyancing solicitor might potentially be able to identify any loopholes or mistakes in the documentation that might render the covenant unenforceable.

The best advice is to not leave a possible third-party issue to chance of course, and that means checking for restrictive covenants at the outset.

After setting out and creating his own property portfolio, Ellis Mellor now enjoys sharing his research and property investment ideas through consulting. Ellis also likes presenting his ideas and industry trends commentary through blogging.




business IPODespite making decent gains in August, following the Chinese bank’s decision to devalue the Yuan, the Euro slipped back again as European bankers cut growth forecast figures and left interest rates unchanged. The Dollar also improved amid positive employment figures. On a wider scale, the reduction in growth forecasts has raised some serious questions over the validity and effectiveness of the trillion dollar asset acquisition plan, which was meant as a means to stimulate economies and encourage growth in the region.

The bank cited low oil prices and a slowdown in emerging markets as the reasons for the reduction, with China being a primary reason for both of these factors. During a speech given by European Central Bank President Mario Draghi, where the new forecast figures were announced, the euro dropped 1.4%, especially as investors and analysts saw the announcement as an indication that the central bank would have to increase its financial support in asset investment.

Positive figures for the U.S. helped to ensure that the dollar performed well against most major currencies, buoyed by positive employment figures and a reduction in the trade deficit, although there are still some fears that the trade deficit will increase further now that the Yuan has been devalued and buyers are likely to invest in cheap Chinese products once again.

The Chinese economic crisis, which has drawn some comparisons with the early stages of the global economic crisis in 2008, has seen oil prices drop as demand from the world’s largest oil buyer dropped considerably. Chinese businesses have also suffered as the Yuan has been dragged upwards by its loose link to the Dollar over the past year. This increase in the cost of the Yuan means that companies have not been able to benefit from the low prices typically associated with Chinese manufacturers and Chinese services, and in turn this means that those businesses have had less to spend.

The result of the Chinese economic problems has been a huge drop in crude oil prices, as well as a reduction in the money spent by Chinese businesses. According to the European Central Bank, these are the two main reasons that the Eurozone has underperformed when compared to its earlier forecasts. As a result, forecasts for both inflation and economic growth were reduced.

Exchange rates closely follow forecasts, and where an economy fails to meet forecasts or is forced to revise forecasts, the market reacts. In this case, with both reductions being seen as a negative indicator of the region’s economic performance, it meant that the Euro slipped in value, undoing the gains it had made in August.

The Euro had performed well in August, following the breaking of the news of Chinese problems. Investors moved away from the Chinese economy, both in terms of stocks and foreign currency, and they moved towards the low yield Euro. The move represented investors looking for less risk and greater stability, but there had been signs that the market was becoming less risk-averse, and with poor inflationary figures around the corner, the lack of potential reward has put many investors off.

In contrast, the U.S. released positive employment figures, which led to positive sentiment regarding economic growth for the country. An increase in exports also meant that the trade deficit for July fell, and sentiment was firmly behind the USD from that point on.

Sweden’s decision to keep rates unchanged meant that Swedish crown also performed well, although this is not considered one of the major currencies. The crown hit a six week high, proving once again that interest rates really do matter to foreign exchange investors looking to turn a profit.


When I set up Magical Penny in 2010, I had a strong interest in personal finance but I didn’t think it would be become my career only a few years later.

The inspiration behind the site was an assertion that investing is not the reserve of the very rich, but a way for everyone to save today to grow their wealth for their families tomorrow. Magical Penny remains a place to both teach and inspire those who wish to have their dreams of financial freedom realised.

The site began as a passion project after first seeing small but consistent contributions into the financial markets grow over time. It was 2007, only months before the world-wide ‘Credit Crunch’. The ensuing months were a transformative experience that fostered a passion for helping people achieve financial empowerment on their own terms.

But as the site grew I received more and more requests for financial advice, from both friends and complete strangers.

I felt stuck.

I could only share what had worked for me, and a lot of the problems I encountered I didn’t have a good answer to help. I resolved to get ‘legit’ and start learning about financial planning.

I decided to pursue a Diploma in Regulated Financial Planning – the benchmark qualification to become a financial adviser in the UK.

Two years later and I have achieved a pass in my final exam, R06 Financial Planning Practices, so I have been awarded my Diploma in Regulated Financial Planning!

R06 Pass

How Long Did It Take?

When I first heard about the Diploma I was told it could be achieved in as quick as 9 months. My plan was to get the exams done within a year. My journey took a little longer, just a couple of months shy of the 2 year mark, but I also found employment during that time with a Chartered Financial Planning firm which has provided me with valuable ‘real-world’ experience.

The Diploma consists of 6 exams.


This module is to develop knowledge and understanding of the financial services industry, including regulation, legislation and the Code of Ethics. I managed to pass the exam with just reading the book, no revision aids or extra study.


This module is to develop knowledge and understanding of investment products and the application of the investment advice process. The exam has formulae and mathematical concepts to get your head around but it’s not too difficult though -roughly GCSE level as far as I remember. I had worked in a quantitative field in my previous career but I wouldn’t say I’m particularly gifted at maths. I still managed to pass this exam on my first attempt. The consensus online says this is the hardest exam of the R0s but I found the subject matter interesting so perhaps my enthusiasm for the content made studying easier and got me over the line.


This module is deceptively difficult. The textbook is written to inform exam candidates about the UK taxation system, and give readers the ability to analyse the taxation treatment of individuals and trusts during the investment advice process. So a lot to cover.

This is the exam that took me off course for getting the Diploma within a year, which was my original time-scale.  Working to get this exam passed tested my resolve but also made me more sure than ever that this path was what I wanted, and I got there in the end.


This exam tests knowledge and understanding of and ability to analyse pension and retirement planning issues. It was around the time of sitting R04 that I finally found a financial planning business to join, to learn the practical side of financial planning.


I felt I was on the final straight by the time I was sitting this exam. This module is on insurance, an area that was new to me, but a very important aspect of financial planning.


This is a 3 hour written exam answering financial questions about 2 case studies. I left the exam with a smile on my face which is always a good sign, and I was thankful for the pass which concluded my journey to Diploma level.


I am delighted to have achieved the benchmark qualification to be a financial adviser and planner in the UK. And more importantly, I’m excited about the future of Magical Penny too…because I now officially know what I’m talking about! :)

I’m looking forward to sharing new information and relaunching Magical Penny: watch this space!


unboltedHave you ever been so short of money that you’ve considered selling something of value?

One Magical Penny reader, Stephanie, approached me in this exact position a few months ago. In her case, she was considering something drastic…selling her engagement ring! She needed a cash injection into her business and this seemed the easiest way to get her hands on money as soon as possible.

Hearing her situation sent shivers down my spine.

Whilst a price can be put on a diamond ring in terms of its monetary value, the sentimental and emotional value could be much higher.

Selling your precious valuables to fix a temporary money problem may not be worth it. Money problems are temporary and financial situations can improve a lot over time if you stay focused. Remember this.

One possible solution if you are in a tight money spot is a service is called Unbolted.

Unbolted is a peer to peer lending platform that allows you to use your valuables as collateral to access money at better rates than traditional loans. The site connects borrowers and lenders using technology.

Individuals can borrow from other individuals in complete privacy, using their personal assets as security.

The site essentially allows anyone to be a mini-pawn broker, using technology to deliver a transparent, low-cost and convenient alternative to high street pawnshops. The service is also authorised and regulated by the Financial Conduct Authority for peace of mind.

If you have valuables that you would like to use as security for a cash payment, the process is simple: you can upload photos of your valuables and get a loan offer in less than 3 hours and then have your item couriered for safe keeping and receive money in 24 hours. The speed of the service is one of the most attractive aspects.

The service is best used for short term cashflow issues. If you have underlying financial problems that you don’t think are resolvable over the next few months, you risk losing your valuables. But as long as you understand this and are happy with the terms of the loan contract, Unbolted  may make your life a lot easier and such a service could be helpful to reader Stephanie with her precious diamond ring so she does not have to part with it forever.




Home owners: There’s something you can do to reduce your monthly bills, and potentially add value to your home at the same time.


The answer is investing in energy saving technologies that prevent money leaving your pocket through your roof, walls, windows or out-dated electrical products. Investing now could lead to long-term savings and help increase the value of your home:

The Clydesdale Bank have put together a great infographic highlighting ways to save:


Source: Clydesdale Bank

Infographic Sources:
1 2 3 4 5 6 7 8 9 10


Free Insulation and cavity wall insulation

Heat rises so you could be losing heat (and therefore money) from your roof.

Fixing it does not have to be expensive. In fact you could be entitled to free insulation!

You can apply for grants as part of the UK’s “Energy Company Obligations (ECO) scheme” -it’s available for people who get tax credits and have an income of £16,010 or less, or those who are receiving certain benefits such as pension credit.

A quick way to check if you qualify is to call the Energy Saving Trust and answer a few basic questions on 0300 123 1234 (England), 0800 512 012 (Wales) or 0808 808 22 82 (Scotland).

Alternatively just call an energy provider for a free assessment. You’re free to pick any energy provider –even if you are not a customer. One popular choice is British Gas who offer free loft and cavity wall insulation to everyone, regardless of income or whether you are its customer.


Green Deal: energy saving for your home

Did you know the British Government wants to help you save money too?
You may be able to claim back money from the government if you make energy-saving home improvements.

 The Green Deal Home Improvement Fund could allow you to claim up to £1,250 towards the cost of installing any 2 of the following:

  • a condensing gas boiler on mains gas
  • double or triple glazing as a replacement for single glazing
  • secondary glazing
  • energy efficient replacement external doors
  • cavity wall insulation
  • floor insulation
  • flat-roof insulation
  • insulation for a room in the roof
  • a replacement warm air unit
  • fan-assisted storage heaters
  • a waste water heat recovery system

More information is available on the Government website.



The Success (and Failure) of Help To Buy

by Adam on June 22, 2015

It’s been over two years  since the ‘Help To Buy’ initiative was launched in the UK in April 2013, but 60% of England’s postcodes have no ‘Help To Buy’ Homes.

There are more than 400,000 eligible homes that buyers could have made their own through the scheme but according to housing market data from the HM Treasury,  1,261 out of 2,117 Postcode Districts in England have yet to see any ‘Help to Buy’ mortgage completions.

help to buy

See also the interactive map from,


The map in the infographic above highlights all mortgage completions across the UK that were as a result of either the Help to Buy 1 (Equity Loan) or Help to Buy 2 (Mortgage Guarantee) scheme, revealing 1,261 ‘black spots’, where no Help to Buy properties are available or where the scheme simply hasn’t been taken up.


Other findings of note:

  • Mortgages on 52,691 Homes in England (as of February 28th, 2015) have completed as a result of Help to Buy so far.
  • 42% of postcode districts in England e.g. NW1 (1261 out of 2117 Total) have yet to see any ‘Help to Buy’ mortgage completions.
  • Leicester is England’s number one Help to Buy city, with 892 completions.
  • MK42, in Bedford, is England’s top Help to Buy postcode, with 309 completions,
Top 10 Regions Total Completions
Leicester 892
Leeds 891
Hampshire 811
Birmingham 788
Wiltshire 749
Liverpool 726
Staffordshire 697
County Durham 696
Norfolk 685
Bedford 683


The Help to Buy initiative is available in 2 parts: An Equity loan and mortgage guarantee options:

Help to Buy 1 – Equity Loans

The initial scheme offers first-time buyers easier access to new builds. Help to Buy 1 offers 5-year interest-free Government loans up to 20% of the property value. Once the 5-year interest-free period is complete, interest is charged at 1.75%, with annual rises of 1% above inflation. First-time buyers using the scheme require a minimum 5% deposit and a mortgage to cover the remaining 65-75% of the property value


Help to Buy 2 – Mortgage Guarantees

The second phase of the scheme offers mortgage providers more incentive to lend higher loan-to-value mortgages. Access to Government guarantees on these loans allows lenders to give both first-time buyers and existing home owners mortgages with deposits as low as 5% on new builds and older properties.


I have friends in Leeds and Leicester who have taken advantage of the scheme, but from the looks of the data, my perception about take-up is more rosy than it should be as Leeds and Leicester are the areas with the highest take-up rate. I would attribute this to quantity of affordable housing stock but its certainly interesting to see how the take-up in distributed up and down the country.

Do you have a ‘Help to Buy’ story you can share in the comments or would like featured on Magical Penny? If so, please get in touch (adam AT