Our Help to Buy Guide has all the information you need to check your eligibility and help you plan the next steps towards owning your first home.
For young people and those looking to get on the property ladder, the realisation of modern day property prices and deposits can be overwhelming. To make home owning possible, in 2013 the government offered the incentive of a Help to Buy equity loan scheme with just a 5% deposit to contribute.
How does the Help to Buy equity loan work?
If eligible you will receive an equity loan up to 20% (40% if in London) of a new build home purchase price. You will not be charged interest on this loan for the first 5 years, after this time interest fees start at 1.75%. This interest fee will rise each year in April by the Retail Price Index (RPI) plus 1% until you repay your loan.
To cover the remaining cost of your home, you will need to apply for a mortgage. You can expect better mortgage rates as the amount to borrow will be smaller which in turn will result in lower interest rates
What do the changes coming in April 2021 mean?
You will be able to apply for the new Help to Buy scheme from 16th December 2020, from this date it will only be available to first time buyers.
The recent introduction of Help to Buy price caps means you will have a set limit that you can spend on your home depending on the region you plan to live in. You should research and plan for this in advance before proceeding with the scheme.
Who is not eligible for the Help to Buy scheme?
The Help to Buy scheme is not available to current homeowners or second time buyers, this includes those wanting to rent out the property.
Assessments carried out by lenders may also affect your eligibility, you may also be rejected if they consider you a risk.
Keeping up mortgage repayments is crucial with a Help to Buy mortgage, so make sure your household receives suitable income for this to be possible.
What if I want to sell my home?
When the time comes to sell your home, you must pay off the equity loan as part of the sale if you haven’t already done so. You can also pay off part or all of the equity loan any time before the end of the term and there is a process to follow in doing so.
For more information on our Help to Buy services, get in touch today and make an appointment with one of our expert advisors.