What is the Help To Buy scheme?
Help to buy is the government's scheme that offers buyers an equity loan to help them purchase a new home. The Help To Buy scheme was launched in 2013 to help new or first-time buyers purchase a new-build home with a 5% deposit.How does the Help To Buy scheme work?
The government provides the homeowners with an equity loan of up to 20% of the value of the property they wish to purchase (or 40% in London). This loan is offered interest-free for the first 5 years of ownership.The scheme is designed to help you get a mortgage for the remaining 75% (55% in London) of the purchase price of the property.
If you’re a first-time buyer in England looking to make use of the help-to-buy scheme you will now need to reserve a property before the end of October. Homes England, the organisation that administers the scheme says the deadline has been brought forward to make sure buyers have sufficient time to exchange contacts and complete the property purchase before the scheme comes to an end.
When is the Help To Buy deadline?
If you’re considering buying a property using the Help To Buy scheme, here are some key dates you should be aware of:- 31st October 2022 6pm -This is the final deadline to reserve a home and submit a property information form for your help to buy agent
- 31 December 2022 6pm - The home you’re buying must be fully built and ready to live in
- 31 March 2023 6pm - You must have completed the purchase and now moved into your new home. If this is not done by this date, you will not benefit from an equity loan from the government.
Is Help To Buy worth it?
If you’re looking to move home but are struggling, the government's Help To Buy scheme could be a big help. Here are some advantages:- Help onto the property ladder
- Can get a home with a smaller deposit
- You can borrow, interest-free for the first 5 years?
- You can access cheaper mortgage rates.
- The amount you owe can increase
- Your loan isn't fixed
- Help To Buy is only for new build properties
- You can only borrow from certain lenders
- There is a danger of negative equity
How do I find a Help To Buy home?
If you’re looking to buy a home using the Help To Buy scheme, you should check the websites of your regional Help To Buy agent to find properties in the area you’re searching for.What other schemes are available?
The Help To Buy scheme may be coming to a close, but there are several other ways that first-time buyers can get onto the property ladder. Here are a few to consider:- First Homes Scheme: This scheme is likely to be the one that replaces Help To Buy. The First Homes Scheme allows first-time buyers in England to get a 30% discount on their mortgage when purchasing a new-build home.
- Shared Ownership: This scheme can help you get onto the property ladder in areas where properties are more expensive i.e London. These schemes allow you to buy a share of the property from a housing association and then pay rent on the remaining amount. For more information on a shared ownership scheme you can read our full guide here.
- Lifetime ISA: The Lifetime ISA (LISA) allows anyone between the ages of 18 and 39 to open an account and save up to £4000 a year towards a house deposit or pension. The government will then pay a 25% bonus on top of what you save. Since you can deposit more each year and over a longer time frame - the total amount saved can be a lot greater than the Help To Buy scheme (up to £1000 a year over a maximum of 32 years). The bonus is paid at the end of each tax year, which differs from the Help To Buy scheme where you receive it on home completion.
