The UK’s “Help to Buy” scheme is just as popular as it has been since it was first launched, and it is a useful way to get first-time buyers a more accessible route onto the housing ladder. It is not without criticism though, so this guide should help you to make your mind up about using the equity loan scheme.
There have been a few different variations of the help to buy scheme over the years, with the latest version an equity loan which is provided the UK government. It currently has an end date of March 2023, so it is important that you get on it quickly if you want to make use of the scheme when you are looking for new build houses for sale! The current scheme, the help to buy equity loan system, was first introduced back in 2013, offering first time buyers the chance to purchase a new home with a very small deposit of around 5%, with up to 20% of the property sale price covered through a government loan. This loan is then repayable according to the value of the property when the home is sold. To date, more than 225,000 people have taken advantage of the scheme and it has soared in popularity over the years. In 2018 it accounted for more than 60% of all new home purchases.
Regional Differences in Help to Buy
There have been concerns that the regional caps placed on help to buy loans in different areas will cause “cliff edges” at the borders of regions. A report into this highlighted some areas, particularly the southeast, where homes were often selling for far higher than the regional cap allowed. This means that the loan scheme was not always available for people living near these expensive areas.
If you are planning your move within London, the rules are slightly different, mainly due to the fact the houses in London are vastly more expensive! Here’s a quick summary:
You need a five percent deposit, and a mortgage for the remaining 55%. The government can provide up to 40% in an equity loan on which you do not pay interest for the first five years. You would still own 100% of the home. The price cap is £600,000 in London.
Another criticism of the scheme is that prices ended up being artificially increased on these new homes, which was great for the builders, but not so good for the buyer! It is still a very good scheme to help first-timers to buy their new home, and there are plenty of ways to establish if it is a good fit for your needs. Try using a help to buy calculator to see if your next move could be helped along with the scheme.
