What you need to know about Help To Buy

With increased house prices, many struggle to scrape together the funds to buy their first home or to move up the property ladder. The Help to Buy scheme aims to help remedy the problem by providing financial assistance to eligible applicants.

The first phase of the Help to Buy scheme, introduced in April 2013, was the Equity Loan. Available until 2020 on new build homes up to the value of £600,000, it is open to first time buyers and home movers. 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.

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 Department of Communities and Local Government, 134,558 properties were bought using a Help to Buy Equity Loan between 1 April 2013 to 30 June 2017, with just over 80% being bought by first time buyers.

If you don’t have the funds for a 5% deposit on 100% of the value of a new home, the Shared Ownership Help to Buy option could be an alternative. You can buy a share of the property of between 25%-75% which can be increased over time and pay rent on the remaining share. This particular scheme is available on new builds or resale homes from housing associations. There are also variations of the scheme for people with disabilities and for those over 55.

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.

On the market with Fenn Wright, Kiln Road in Ardleigh is a modern collection of three, four and five bedroom homes that offer the perfect space for a first time buyer or growing family. There are currently seven plots remaining on the first phase.