History is littered with Government backed schemes that have failed in their mission to help people on to the housing ladder. Either take-up was lower than expected or they weren’t very well designed.
The recent introduction of Help to Buy has been a success and we have a scheme that actually does work. We’ve been able to help an increasing number of clients with this scheme - including first time buyers who without it, would be unable to buy.
For Londoners, the scheme has been tweaked to account for the higher house prices in the capital. The maximum purchase price for all buyers is £600k but in the Capital, the Equity Loan amount can be up to 40% of the purchase price i.e. £240k - compared to 20% out of the region.
We have a Central London office so these changes are good news for many of the people we see. It has been hard for clients to even find a modest property in the areas they wanted to live but this will give them a much higher chance of finding somewhere they can afford.
Here's a summary of the information provided on the Government website:
- The Help to Buy scheme is an equity loan provided by the Government. They lend you up to 40% of the cost of your new build home, so you will need a minimum 5% deposit and a 55% mortgage to make up the rest.
- The equity loan is for a maximum of 25 years or before if the property is sold or the mortgage is redeemed, whichever term is the shorter of the two.
- You will not be charged any interest on the 40% loan for the first five years of owning your home. A management fee of £1 a month will be charged from the date of purchase.
- From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI (Retail Price Index) inflation plus 1%.
- Help to Buy - equity loan homes are available from house builders registered to offer Help to Buy homes in England. Registered builders will make it clear in their advertising if Help to Buy homes are available on their development sites.
What should I do now?
- Look for developments offering Help to Buy Equity Loan in the area you want to live.
- Speak to an independent mortgage broker and look to get an agreement in principle.
- Once you reserve a property, complete the property information form and reservation paper work and the provider will send this all through to us.
- As long as we have everything we need and you pass the affordability check, we will send you an 'Authority to Proceed' within 4 working days.
- Once you have received your 'Authority to Proceed' you can apply for your mortgage.
Santander have just announced they plan to support this scheme and with more lenders set to follow suit, now could be the right time to talk to one of the team here at LIFT-Mortgages.
If you're a first time buyer, download our Guide to learn more about the house-buying process and for answers to your first time buyer questions.