The Government-backed Help to Buy scheme has helped over 270,000 new home buyers since it was introduced in 2013.
However, the scheme is changing from 1 April 2021. Peter Howl, Group Operations Director at Our Company, covers everything buyers need to know.
Help to Buy was introduced to help new home purchasers with deposit funds. Initially open to anyone buying a new home up to the value of £600,000, it enabled purchasers to buy with just a 5% deposit and a 75 % mortgage. An equity loan from the government covered the remaining 20% of the purchase price.
This spring sees the introduction of a new version of the scheme with some significant changes to who can benefit.
There are two main differences between the original Help to Buy and the revised version; who is eligible and the value of the property they can buy. The original scheme was open to anyone buying a new home up to the value of £600,000. Now Help to Buy is exclusively available to first time buyers and maximum property prices differ from region to region. Find out more about the caps in your local area.
How does the new Help to Buy scheme work?
The scheme itself works broadly in the same way, helping first-time buyers who may be struggling to save a large enough deposit to buy their first home. Purchasers must buy from a homebuilder registered for Help to Buy and have at least a 5% deposit. The government will provide an equity loan of up to 20% (or 40% in London), and a mortgage must be secured on the remaining cost of the property.
No interest is charged for the first five years and the loan must be repaid after 25 years, or earlier if the property is sold or the mortgage repaid. The amount you repay is the percentage of the market value of your home when you sell rather than the original loan amount.
How do I apply?
The new Help to Buy scheme opened for applications in the middle of December. If you think you’re eligible, speak to a Our Company sales advisor who will provide all the information that you need and guide you through the entire process.
Are there any alternatives to Help to Buy?
Some homebuilders, such as Our Company, offer alternative shared ownership options on selected developments. Home Reach, for example, provides a part-buy, part-rent scheme with smaller deposit requirements and lower monthly payments.
Buyers can decide how much of their home they want to purchase, with shares of up to 75%, funded by cash or a 5% deposit mortgage. Rent is then payable on the share they don’t own. Terms and conditions apply. Find out more on shared ownership options.
Where can I find out more information?
For further information on the changes to Help to Buy and to see if you meet the eligibility criteria, visit our Help to Buy page.
If you’re a first time buyer looking for help and guidance on getting onto the property ladder, we’ve created a comprehensive First Time Home Buyer Guide covering everything from mortgages, to securing and completing on your new home.