This year Help to Buy could potentially contribute to another 130,000 properties being bought in 2014, 12% of the market, according to Savills, of which approximately 30,000 are expected to be newly built.
So if you are thinking of buying – or selling in Wales, England or Scotland, help is available with your deposit if you want to move.
Three things you need to know to be sure that you are eligible for Help to Buy:-
Are you buying a property for under £600,000?
Will it be your main home?
Can you afford the monthly mortgage, but not the deposit?
Remember this is NOT a scheme just for someone buying for the first time. For example, if you are considering selling a £400,000 property and buying one for £600,000, then you may eligible for help. So whether you own a home or are buying for the first time, you may well be eligible for Help to Buy.
But, if you are hoping to use this scheme to make money from property, for example through buy to let, forget it, that’s not allowed!
What schemes are available?
There are two schemes you can choose from – unfortunately they are named the same thing, so it’s a bit confusing!
Scheme one: Help to buy for new build properties. The main benefit of this scheme is you tend to secure better mortgage rates of 3-3.5%. This scheme is provided for via your local Help to Buy agent.
Scheme two: Help to buy for existing homes. This is provided by participating mortgage lenders. However, bear in mind lenders such as the Yorkshire Building society will offer 95% mortgages without being reliant on the government scheme.
Typically lenders offering mortgages via Help to Buy and those doing it independently from the government scheme are offering similar mortgage rates of around 5%.
Different schemes for different regions – which one applies to you?
England, help to buy for properties up to £600,000
If you are considering selling and buying a new build, or buying for the first time, then you can buy one under the scheme with as little mortgage as 75% and rates around 3 to 3.5%. To access this scheme you need to contact a Help to Buy agent in your local area.
If you are considering selling and buying an existing home, or buying one for the first time, then you can access this scheme via participating mortgage lenders.
Wales, help to buy for properties up to £300,000 for new build and £600,000 for existing homes
This scheme is available on new build properties ONLY and you can buy under shared equity (where the government holds onto part ownership of the property).
Alternatively, you can buy under the ‘equity loan’ scheme on both new build and exiting homes which is the same as the English scheme. You can buy up to £600,000
Scotland help to buy for properties up to £400,000
This scheme is available to help Scottish people buy a new build property or an existing home. You can be buying and selling or just buying. You can find more information on the scheme on the Scottish Government website
What are the pros and cons?
It’s important to consider whether the scheme is right for you and if you need it all. What’s dangerous is to consider using the scheme to stretch yourself financially and taking on a property with a small deposit and a mortgage deal at 3 to 3.5%.
In a few years’ time you could be paying double your current cost of a mortgage. Since 2000, rates have varied between 5-7% and have only been as low as they are now since the credit crunch.
Being forewarned is forearmed, so read more about the pros and cons of the Help to Buy scheme.
Is Help to Buy right for you? Read my other articles on the H2B schemes and if you have any queries at all, please don’t hesitate to contact us and don’t forget to read our H2B checklists:-
Help to Buy checklist for an existing home
Help to Buy checklist for a new build
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