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The New Help to Buy Scheme is Here This new revised scheme will run from 2021 to 2023 allowing first time buyers to reserve their new build property as early as mid December 2020
Find out all the details below and RT for awareness
The Help to Buy Scheme has been somewhat successful so far allowing roughly 250,000 first time buyers to buy their first home
So it’s no wonder they are building on this especially at a time where first time buyers are finding it particularly difficult to save a large deposit
So it’s no wonder they are building on this especially at a time where first time buyers are finding it particularly difficult to save a large deposit
WHO IS ELIGIBLE?
The NEW help to buy scheme is ONLY eligible for first time buyers, no one on the application is allowed to have owned and land or property or had any form of sharia mortgage finance
You'll actually need to sign a declaration to state this is your first purchase
The NEW help to buy scheme is ONLY eligible for first time buyers, no one on the application is allowed to have owned and land or property or had any form of sharia mortgage finance
You'll actually need to sign a declaration to state this is your first purchase
HOW DOES IT WORK?
Similar to the original Help To Buy scheme it allows buyers to
- Put down a deposit as low as 5%
- Obtain a government loan up to 20% (up to 40% in London)
- Arrange a mortgage for the remaining amount
See this example of a £300k purchase for clarity
Similar to the original Help To Buy scheme it allows buyers to
- Put down a deposit as low as 5%
- Obtain a government loan up to 20% (up to 40% in London)
- Arrange a mortgage for the remaining amount
See this example of a £300k purchase for clarity
WHATS NEW?
There are regional price limits set at 1.5 times the average first-time buyer price in each region in England. This is intended to manage the over inflated price tags new properties normally come with keeping prices in line with current averages
There are regional price limits set at 1.5 times the average first-time buyer price in each region in England. This is intended to manage the over inflated price tags new properties normally come with keeping prices in line with current averages
The equity loan itself can be worth as much as £240k but its important to know how it works
The use of an EQUITY loan means that the amount you repay can differ - the table below gives examples of how the amount you repay can change if your home increases or decreases in value
The use of an EQUITY loan means that the amount you repay can differ - the table below gives examples of how the amount you repay can change if your home increases or decreases in value
Repaying your equity loan
- for the first 5 years there is no interest payable
- from year 6 there is an interest rate of 1.75% on the loan
- this interest rate will rise each year with CPI, plus 2% (previously RPI plus 1%)
- can be paid in full or in part at any time
- for the first 5 years there is no interest payable
- from year 6 there is an interest rate of 1.75% on the loan
- this interest rate will rise each year with CPI, plus 2% (previously RPI plus 1%)
- can be paid in full or in part at any time
RESTRICTIONS
As expected, you cannot let out or sublet the property without seeking consent first
You also cannot make any structural alterations without seeking consent first, structural alterations such as an extension would be breaking these rules
As expected, you cannot let out or sublet the property without seeking consent first
You also cannot make any structural alterations without seeking consent first, structural alterations such as an extension would be breaking these rules
SUMMARY OF CHANGES
So what are the main differences between the old and the new help to buy scheme
- The new scheme is for first time buyers ONLY
- It also includes regional price caps
- Interest will increase annually by CPI plus 2% rather than RPI plus 1% previously
So what are the main differences between the old and the new help to buy scheme
- The new scheme is for first time buyers ONLY
- It also includes regional price caps
- Interest will increase annually by CPI plus 2% rather than RPI plus 1% previously
THINGS TO CONSIDER
When you use the Help to Buy Equity Loan you will now have TWO LOANS
A mortgage and an equity loan from the government - it is very important to consider this before and during the term of the loans as this will need to be affordable
When you use the Help to Buy Equity Loan you will now have TWO LOANS
A mortgage and an equity loan from the government - it is very important to consider this before and during the term of the loans as this will need to be affordable
THINGS TO CONSIDER
The below table considers interest paid on two standard mortgages and two equity loans
As you can see for the first 5 years the equity loan is a lot cheaper then becomes a lot more expensive as the interest increases
Source: Moneysavingexpert
The below table considers interest paid on two standard mortgages and two equity loans
As you can see for the first 5 years the equity loan is a lot cheaper then becomes a lot more expensive as the interest increases
Source: Moneysavingexpert
THINGS TO CONSIDER
The Help To Buy scheme has had a bad reputation in the past for a number of reasons such as
- Overpriced homes
- Poorly built homes
They have tried to combat this with the new regional price cap and a New Homes Ombudsman launching next year
The Help To Buy scheme has had a bad reputation in the past for a number of reasons such as
- Overpriced homes
- Poorly built homes
They have tried to combat this with the new regional price cap and a New Homes Ombudsman launching next year
THINGS TO CONSIDER
Do be weary of overpriced properties and ensure you check local sold house prices to ensure you are not paying too much
Also, where concerned about poorly built homes pick a reputable homebuilder, check reviews and if needs be hire a snagger to have a look
Do be weary of overpriced properties and ensure you check local sold house prices to ensure you are not paying too much
Also, where concerned about poorly built homes pick a reputable homebuilder, check reviews and if needs be hire a snagger to have a look
A report done by Which? studied the amount of homebuyers with repaid equity loans. It studies those who have made a profit and those who have made losses on their help to buy equity loans
The full article can be found here and is WELL WORTH A READ if you are considering HTB
The full article can be found here and is WELL WORTH A READ if you are considering HTB
I personally, am neither for or against the Help To Buy scheme - how can I be, everyones scenario is unique
As always I am a firm believer of people finding out all the information to see what works for them - everyones scenario is different
As always I am a firm believer of people finding out all the information to see what works for them - everyones scenario is different
There are a lot of talking points so feel free to share below
Are you for or against Help To Buy?
Have you used the Help To Buy scheme yourself?
Will the regional price cap actually work?
How will this affect the wider market?
Leave comments below and share
Are you for or against Help To Buy?
Have you used the Help To Buy scheme yourself?
Will the regional price cap actually work?
How will this affect the wider market?
Leave comments below and share
