What you need to know about the new Help to Buy scheme
Help to Buy — The government’s flagship affordability scheme is changing in England. At the moment buyers can use the scheme to purchase a new-build property worth up to £600,000 with a 5% deposit and a 20% government-backed loan (40% in London).
This scheme will end on March 31 2021, but will be replaced by a revised version that runs until March 2023. Buyers can reserve a home under the new rules from December 16, but will not be able to move in until the new scheme starts next year.
How does it work?
Just as before, the new scheme sees the Government lend homebuyers up to 20% of the cost of a newly built home, or 40% in London.
Participants put down a deposit of at least 5% and must take out a repayment mortgage of greater than 25% to make up the difference.
Unlike before, only first time buyers qualify for a loan. The Help to Buy Equity Loan used to be available to those who had owned property before but did not at the time of applying.
Even if you don’t live there, you must not have a financial interest in any other residential property to be eligible.
Is Help to Buy only for new builds?
Yes, it is. As previously, the scheme is restricted to new homes only and not resale properties. We only sell brand new, high specification homes in excellent locations. Take a look at the properties we have available with Help to Buy.
What happens after the first 5 years?
You won’t be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. You pay a monthly management fee of £1 for the life of the equity loan.
An equity loan is secured against your property in the same way as a repayment mortgage. You must repay the equity loan when you sell the home, pay off your repayment mortgage or reach the end of your equity loan term. But you can repay all or part of the equity loan any time before then.
What else is new?
Help to Buy (2021-2023) has price caps set at 1.5 times the average first-time buyer property price in each region in England.
The aim of this price cap is to keep the prices of new homes closer to the average regional first-time buyer property prices. This also reduces the amount that first-time buyers need to borrow. You can check out the regional price caps here.
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Very caring and professional team, especially Tom Hilder. They take the time to understand my needs and requirements, and help me to make my decision on one of the biggest purchases in my life! I would highly recommend them for anyone looking for buying a property.