Help to Buy
The Help to Buy scheme aims to provide financial assistance to eligible applicants who are looking to buy their first home or move up the property ladder. The first phase of the scheme started in April 2013 and will run to March 2021.
Known as an Equity Loan, this product is available on new build homes up to the value of £600,000 and is open to first time buyers and home movers. However, from 2021 significant changes are due to come into effect which will restrict these loans to first time buyers purchasing new build homes. This second phase of the scheme will run until March 2023, after which there are no plans to replace it.
Once the planned changes come into effect in 2021, it is estimated that approximately 38% of homeowners who used an Equity Loan in 2018 would no longer be eligible. In addition to the scheme being restricted to first time buyers of new build homes, regional caps will also be introduced which will limit the scheme even further. These caps will be set at 1.5 times the regional average first-time buyer price, with a maximum of £600,000 in London.
However, until April 2021, under the terms of an Equity Loan buyers can put forward a 5% deposit, subsidised with a 20% government loan – a 75% mortgage from a commercial lender then makes up the rest. To qualify, the home must be your only residence and it is not available for buy-to-let properties.
Situated in the heart of the marina at Brightlingsea, is Harbourside, a brand new collection of impressive one, two and three bedroom apartments and spacious houses. Contact our Colchester office on 01206 763388 for further details.
It is worth bearing in mind that there is no interest to be paid on the 20% loan until after five years. In the sixth year the interest is 1.75%, and after this time the rate will increase in line with inflation, plus one percentage point. Additionally, there are no pay back penalties – if the loan remains unpaid when you come to sell, the government will reclaim the loan at the property’s current value.
According to the Ministry of Housing, Communities & Local Government, 221,405 properties were bought through the Help to Buy Equity Loan scheme between 1 April 2013 to 31 March 2019. The total value of these equity loans was £12.46 billion, with the value of the properties sold under the scheme totalling £57.61 billion. Most home purchases in the Help to buy Equity Loan scheme were made by First Time Buyers, accounting for 179,816 (81%) of total purchases.
Tey Grove is a fantastic collection of two and three bedroom modern homes converted from a spacious “barn style” commercial building in the village of Feering. Each property has its own garden space and all are based around a central, walled courtyard. For further details contact our Witham office on 01376 516464.
For those looking ahead who want a cost-effective way to save for a first home, the Help to Buy ISA is something to consider. This scheme means the government contributes funds towards your new home. To receive the maximum government bonus of £3,000 you need to save £12,000 and must be in a position to buy. This bonus can be claimed against a property up to the maximum value of £250,000 outside of London.
What is great about the Help to Buy ISA is that it isn’t based on each household, but instead every individual first-time buyer, meaning you and a partner can both save at the same time and cash in your bonuses on the same property. To find out if you meet the eligible criteria you can apply for an ISA through any of the providers listed on the Help to Buy website.