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Help To Buy Schemes

There are various schemes available to assist with buying your own home including the Government Help to Buy Schemes.

These come in various forms and a brief summary of each is set out below:

Equity Loan

Help to Buy is a Government backed equity loan scheme available to purchasers of new build homes available to make moving more affordable.

Qualifying purchasers have the benefit of the Government lending them up to 20% (40% for some London properties) of the cost of their new build property. The purchaser will need to find a 5% deposit and obtain a mortgage for the remaining 75%.  The first 5 years of the Government loan are interest free. The Government loan is secured against the purchaser’s home by way of a second charge, ranking behind that of the first lender and will need to be repaid in due course. The amount to be paid back will depend upon the value of the property at the time of repayment of the equity loan.

From 1st April 2021 the scheme is only available to first time buyers and new regional prices caps will apply. Full details of the scheme can be found here 

Help to Buy ISA

This is relevant if you are saving to purchase your own home. Under the Scheme the Government will boost by 25% every £200 you save up to a maximum of £3,000.

You have to be over 16 to qualify and be a genuine first time buyer.  To qualify for the bonus the property you are purchasing cannot be worth more than £250,000 (£450,000 in London) and you must purchase with the assistance of a mortgage. You will not qualify if you plan to rent the property out following completion. The Help to Buy ISA closed to new accounts at midnight on 30 November 2019. If you have already opened a Help to Buy ISA (or did so before 30 November 2019), you will be able to continue saving into your account until November 2029.

Subject to qualifying criteria, you may wish to consider a lifetime ISA. Further details can be found here

Mortgage Guarantee Scheme

The Government recently announced a new mortgage guarantee scheme to support first-time buyers, home movers and previous homeowners with a 5% deposit. The Scheme is to run for 18 months from 19th April 2021 to December 2022 and is not restricted to just first time buyers although there are conditions.

It is important to remember that this means that 95% of the property’s value will be the mortgage loan. Lenders have in the past been reluctant to lend up to this level. However, this Scheme sees the Government shouldering some of the cost if the lender loses money for example if the borrower fails to keep up repayments or in the event of a repossession thus encouraging lenders to again offer these products.

Other Schemes

You may also wish to consider purchasing under a shared ownership scheme or right to buy. Please see the Help To Buy website for further details of all of the above here.

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