Help to buy-Part 1
Help to Buy Explained - Part 1
The "deposits demanded for a mortgage these days have put home ownership beyond the great majority who cannot turn to their parents for a contribution" - George Osbourne MP (Budget statement to Parliament, 20th March 2013)
In March this year, during his budget statement to the House of Commons, George Osbourne MP introduced Help to Buy; the coalition governments expansion of the FirstBuy scheme. This, unlike its predecessor, was not solely aimed at buyers trying to get onto the property ladder but also those trying to move up it. Help to Buy incorporates equity loans, shared ownership, NewBuy, and in 2014, mortgage guarantee. We start this two part article with explanations and qualification criteria of equity loans and shared ownership:
HtB Equity Loan
Through the equity loan scheme the government allows you to borrow 20% of the purchase price of a brand new home, providing you have a 5% deposit. You would therefore only need a mortgage to cover the remaining 75% of the properties value, which should be at a better rate as you are putting more money down. The new home needs to be less than £600k in value and to be brought from a participating builder, Rightmove provides a search function for applicable properties.
The shared ownership scheme is available through local authorities for individuals currently renting a property from the council or housing association. It allows you to buy a percentage of your home, between 25%-75%, and pay rent on the remaining share. At any time you are able to buy more shares in your house, the cost of which will be based on the value of the property at the time.
For more information on both of the above schemes visit http://www.helptobuy.org.uk/ where you can also find your local HtB agent. If you have any further queries please do not hesitate to contact us.
In part two we will explain NewBuy and the mortgage guarantee scheme, along with analysis on how this may effect the property market.