The housing market has been going through a bit of turmoil in recent years, with lending rates low and first-time buyers few and far between, it is great news to hear that a new scheme could be set up to help the market grow.
‘Help to Buy’ is a Government scheme that was introduced to give first-time buyers a better chance of getting on the housing market with only a 5% deposit, however they could only buy new-builds. The scheme allowed anyone looking to buy a house an opportunity to dive onto the property ladder.
October saw this great scheme extended and the rules changed slightly; you can still put your minimum 5% deposit towards a lovely newly built home or now you can buy a pre-owned home, as long as the property value is under £600,000.
Once you have your 5% deposit there are two ways to progress the purchase of your new house; through a Mortgage Guarantee, offering you a standard mortgage of 95%, or an Equity Loan of 20% of the purchase price plus a traditional mortgage. The latter option is only available on new build properties.
The Mortgage Guarantee has been set up to make mortgages more available for us, offering competitive interest rates. The Government acts as the guarantor with no extra paperwork or fees required, so it the scheme doesn’t over-complicate things.
Hopefully this scheme comes into play so houses are more affordable for first-time buyers and help boost the housing market. If you are interested in buying a home, Rightmove have a great Mortgage Affordability Calculator, as well as some other nice tools to work out how much you could borrow and more details about how the scheme works.
Here’s some cans and can’ts for this new scheme;
- You can buy a home off the plan
- You can’t buy a home with an interest-only mortgage
- You can’t part exchange your existing home for a Help to Buy home
- You can purchase a home up to the value of £600,000
- You can’t own a second home
- You cannot rent out your existing home to buy a Help to Buy home
- You can increase your mortgage, but only with permission from the Post Sales HomeBuy agent
- You cannot extend your home or make major alterations unless for disability reasons
- You can add names to the Help to Buy property
If you have any queries about the scheme, click here.