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:
With a Help to Buy equity loan the Government will lend you up to 20% (40% for some London properties under the London Help to Buy) of the cost of your new build property. You 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.
It is important to note the Government loan will be secured against your home by way of a second charge ranking behind that of your first lender and will need to be settled in due course. The amount you will pay back will depend upon the value of the property at the time you wish to pay off the second mortgage.
You do not need to be a first time buyer to qualify for an equity loan but you must not own any other property at the time you buy your home. You will also not be able to let the property.
This scheme will end on 31st March 2021. More information about the new scheme can be found here
Help to Buy ISA
The Help to Buy ISA Scheme has been closed for new accounts from 30 November 2019. As long as you opened a Help to Buy ISA before 30 November 2019, you will be able to continue saving into your account until November 2029.
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 it out following completion.
You may have missed out on the Help to Buy ISA but you can use a Lifetime ISA to buy your first home or save for later life. To open a Lifetime ISA you must be 18 or over but under 40.
Under the Scheme you can save up to £4,000 each year, until you’re 50. The Government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.
To use your savings to buy your first home the property you are purchasing must cost £450,000 or less and you must purchase the property at least 12 months after you open the Lifetime ISA and you must purchase with the assistance of a mortgage.
The good news about a Help to Buy ISA and Lifetime ISA is that if you are jointly purchasing the property with someone else who also has a Help to Buy or Lifetime ISA, they can use their savings and government bonus too.
However, if you have a Lifetime ISA and a Help to Buy ISA, you can only use the Government bonus from one of them to buy your first home.
It is possible to transfer money from a Help to Buy ISA to a Lifetime ISA. However, if you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay a 25% withdrawal charge.
You may also wish to consider a 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 schemes and useful information.
These schemes are becoming increasingly popular as the first step onto the property ladder.
Stamp duty relief is available if you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before. This has replaced the special rules for first time buyers for the for the period referred to above.
We are members of the Help to Buy Panel and have dealt with many transactions under the available Schemes.