The New Help-to-Buy Scheme
A government programme aimed at assisting first-time buyers in the housing market has been extended until 2021. The Help to Buy scheme has been in place since 2013, with the goal of assisting those who cannot afford a deposit on a home by providing an equity loan to cover the majority of the purchase price.
The 2013–2021 Equity Loan Scheme closed for new applicants on December 15, 2020, but is still open for existing applications until March 31, 2021, in order to complete the transaction by the end of May. From December 16th, 2020, to March 31st, 2023, applications for Help to Buy 2021–2023 were accepted.
What Exactly Is The Help To Buy Scheme?
Help to Buy works by giving those who qualify an equity loan to help with the cost of a home purchase. Property equity loans function by allowing you to borrow money against the value of your home. To know the value of your home you can contact the local estate agents for a property valuation. For properties in Surrey, contact estate agents in Surrey to get a property valuation done.
The amount you can borrow is up to 20% of the entire cost of the property, with Londoners being able to borrow up to 40%. The loan is interest-free for the first five years, and you’ll only have to pay a £1 monthly administration charge in addition to your mortgage. You’ll begin repaying the loan in year 6, with a monthly interest rate of 1.75 per cent. The interest rate will climb with the Consumer Price Index each year.
The property may be repossessed if the loan is not paid in full according to the agreed-upon terms. Repayments commence at the end of the equity loan period or when your mortgage is paid off. You may also be requested to repay the loan sooner if you sell your house or do not fulfil the agreed-upon terms of the loan.
If the value of the property rises and you try to sell it before paying off the loan, you’ll have to return the loan at the current market rate, not the rate at the time you took it out. That is if you borrow 20% from the government for a house worth £100,000 (£20,000), and the property doubles in value over time, the worth of £200,000 with 20% would become £40,000.
Although Help to Buy provides much-needed financial assistance to people seeking to climb on the property ladder, it’s important to think about all of the financial ramifications when applying for the loan, as well as keeping an check on your credit score. Keeping your credit score clean, you can begin your property search. Contact local estate agents to expedite the process. If you are looking for houses for sale in Surrey then it is best to get in touch with the local estate agents in Surrey.
Requirements for Help To Buy in 2021-2023
You and anyone else applying for the 2021 Help to Buy Scheme must be first-time purchasers. This is one of the primary distinctions from the previous iteration, which ran from 2013 to 2021 and was more flexible in allowing people who have previously owned a home to participate.
Buyers must be over the age of 18 and unable to purchase on the open market. You’ll need to give financial proof of your situation, just like you would for any other mortgage.
In this scenario, the Help to Buy scheme will require proof that you are unable to raise the deposit on your own, as well as confirmation from the person with whom you are purchasing the property, if applicable.
The house must be brand new and purchased from a Help to Buy licenced builder. Check to see which home builders in your area provide Help to Buy homes before applying.
What is the required deposit for Help To Buy in 2021-2023?
A deposit of at least 5% of the total value of the home is required for a Help to Buy home. This is a 15% savings over a deposit for a first-time buyer not participating in the plan.
That implies that if the house is worth £100,000, you’ll have to pay £5,000 instead of £20,000 upfront. You’ll also be required to pay a reservation fee of up to £500 to secure your home.
The balance ensures that you can afford inflation on the remainder of the deposit you borrow, given that you will repay it at the current market rate when you sell it. Unless you’ve already paid everything off. However, it may be easier to budget for future payments rather than trying to cobble together a deposit upfront, like the Help to Buy system encourages.
The Help to Buy 2021–2023 initiative is presently accepting new applications for first-time buyers. If you qualify, it will help you overcome the challenge of saving for a deposit on a home by providing you with a government loan to cover the expense.
The loan must be repaid in full, and you may wind up paying back more than you borrowed, particularly if the value of the property rises considerably and you sell it before paying off the loan.
Remember, this new plan is only for First-Time Buyers who want to buy a new build property from a registered homebuilder; eligible first-time buyers might reserve their homes starting in mid-December 2020 and receive keys to move in on April 1, 2021. This new Help To Buy scheme ends March 2023.