What is the current Help to Buy scheme and how does it work?
Help to Buy is a government scheme which helps first-time buyers and home movers to purchase a new build property worth up to £600,000 with just a 5% deposit. The 5% deposit is of the overall value of the property you intend to purchase so if the property is worth £200,000, you would need a £10,000 deposit.
Under the scheme, the government will then lend you 20% of the purchase price which is interest-free for the first five years. You then borrow the rest (up to 75%) from a mortgage lender, on a repayment basis.
What are the benefits of using the current Help to Buy scheme?
There are numerous benefits of using the current Help to Buy Scheme. Firstly, a more manageable deposit of 5% enables first time buyers and home movers to save up and buy a new home more quickly. The 20% government equity loan is then interest-free for the first five years which helps as you adapt to paying your mortgage and bills and because you are borrowing less overall (75%), it may also be easier to secure a mortgage. Likewise, a smaller loan-to-value also opens up more competitive rates of interest. Lastly, the current Help to Buy scheme is available on properties up to £600,000 (excl. London) but not for much longer…
Help to Buy is changing in 2021. What will the changes mean for first-time buyers?
First-time buyers will still be eligible for the scheme but their selection will be reduced as a regional price cap is coming into force across the whole of the UK. In the North West, where our properties are based, the new Help to Buy scheme will only be available on homes up to a maximum value of £224,400 which is a huge drop from the current value of £600,000.
Help to Buy is also available to home movers at the moment. What will the changes mean for them?
Home movers will no longer be eligible for the Help to Buy scheme. It will be available for first time buyers only which means home movers will need to save up for a larger deposit in order to purchase a new build home.
What are the deadlines for using Help to Buy under the current scheme?
To take advantage of the current Help to Buy scheme, first time buyers and home movers will need to reserve a home by 15 December 2020 and complete the purchase by the 31 March 2021.
If you have any questions or queries about the changes to the scheme, please do contact us by calling 01244 310 050 or emailing sales@blueoakestates.co.uk and we can arrange for you to speak to an independent mortgage advisor.
