What is the Help to Buy Scheme?
As an approved Help to Buy provider, we ensure that the buying process for our customers is as straight forward as possible. Part of this is to provide them with all the relevant information they could need to make their purchase decision, including the Help to Buy schemes.
There are three schemes that have been created by the government to help you take the first step to buying your own home, these include the Help to Buy ISA and Shared Ownership scheme. In this article, we are going to explain how the Help to Buy Equity Loan works and how you can use this scheme to buy a new build home.
The Help to Buy Equity Loan – Key Facts
With the Help to Buy Equity Loan, the Government will lend you up to 20% of the cost of a new build property with a purchase price of no more than £600,000. This means you’ll only need to provide a 5% cash deposit and a 75% mortgage to cover the rest. Here is an example of how the scheme works:
For the first five years, you won’t be charged fees or interest. In the sixth year, you’ll be charged 1.75%. After then, the fee rises by inflation based on the Retail Prices Index (RPI) plus 1% each year. The loan must be paid off after 25 years or it can be repaid earlier upon the sale of your home; you can pay back part or all of your equity loan at any time.
When using the scheme to purchase your new home, you won’t be able to sublet or enter into a part exchange deal on your old home - you also must not own any other properties.
The equity loan is currently available to first time buyers as well as existing homeowners. However, as detailed on the official Government Help to Buy website, following the Budget 2018, the current scheme will be coming to an end in March 2023. A new version of the Help to Buy scheme will operate from 1 April 2021 until 31 March 2023 which will only be available to first time buyers and will introduce regional property price caps based on local markets. To find out more about the changes to the Help to Buy scheme please click here.
How do I apply?
When researching new build developments, look out for the Help to Buy logo and ask about the scheme. Or alternatively, you can approach a government-appointed Help to Buy agent.
Once you’ve found your perfect Morrish home, our friendly team will guide you through the Help to Buy process. When you are ready to reserve your new home, we will carry out the following steps with you:
- Confirm that you have a minimum 5% deposit and 75% mortgage offer
- Take payment of your home reservation fee
- Help you complete the Help to Buy application
Once you have Government approval to proceed, the usual legal process to completion will take place.
If you are looking to purchase a new Morrish home and wish to use the Help to Buy process, please feel free to get in touch and we will be more than happy to help.