‘Help to Buy is a phrase that has gained a lot of popularity and publicity in recent years, particularly in the press.  But what does it actually mean and how can it be of interest to you? Here, we hope to dispel some of the uncertainty and provide an introductory guide to the scheme.

 

What is ‘Help to Buy’?

 

Help to Buy is a government backed scheme whereby the government, through a Help to Buy Agency, will provide half of the deposit needed to purchase a home. In the usual course of events, upon exchange of contracts (the stage when contracts have been signed and purchase formally agreed) a 10% deposit is payable by the Buyer to the Seller. For some, raising the funds for this initial step, the deposit, can seem an overwhelming obstacle. However, with Help to Buy, the government will provide an ‘Equity Loan’ between 10% and 20% of the purchase price of the property which means, as the prospective Buyer, you will only need to provide 5% of the deposit and arrange a mortgage for the outstanding purchase price.  

 

How does it work?

 

The Government will provide an ‘Equity Loan’ which will need to repaid by you in full after 25 years or on sale of the property, whichever is earlier.  The Loan will be interest free for the first five years, after which interest will be payable on the loan amount.  After completion of the purchase it is possible to make voluntary repayments at any time, however if the house is sold the amount of the loan will be recouped on the market value of the property at the time of sale.

 

What does this mean for you?

 

It was announced in March 2014 that the Help to Buy scheme would run until 2020. Help to Buy is a useful aid to help gain a footing in the property market and can assist you in your desire to purchase a home. As we know, house prices have been increasing steadily with property prices increasing on a year to year basis and recent research http://www.theguardian.com/business/2014/oct/10/rightmove-house-prices-rise-30-per-cent-five-years-outside-londonhas found that some property values could rise by up to 30% within five years. It can therefore be difficult to take that first step in purchasing a home but with this scheme more opportunities are available.

 

Help to Buy is available for New Build Homes and many developers offer the scheme on their properties. It is also key to note that Help to Buy is not just for First Time Buyers, as existing home owners can apply too. Help to Buy mortgages can be obtained for properties up to £600,000.00, you should contact your mortgage broker or local Help to Buy agent for more details.

 

More information

 

If you would like more information on Help to Buy and how this may apply to you, please contact someone in our Residential Conveyancing Team today, who will be happy to help.

 

Find your Local Help to Buy Agent at: http://www.helptobuy.org.uk/