Speaking ahead of the Conservative Party conference this week, Prime Minister Teresa May confirmed on 1st October that the popular Help to Buy scheme is to be extended. This was amidst speculation that the scheme may be halted.

There are a variety of options available under the Help to Buy umbrella, but the most frequently discussed and well-known option is the Help to Buy: Equity loan. This option is applicable on brand new homes under the £600,000 limit, whereby the potential purchaser pays a 5% deposit, the Government then subsidises this with a 20% contribution, with the remaining 75% owed on a mortgage. It was initially introduced to assist First Time Buyers, in order to help them get on the property ladder with a lesser deposit. No interest fees are applicable on this loan for the first 5 years, at which point they are then applied in-line with the rate of inflation. The full loan is then repaid at 25 years or alternatively when the property is sold, at which point the repayment will be 20% of what the property is worth at the point of sale, rather than the original purchase.

Since the introduction of the Help to Buy scheme in 2013, over 130,000 purchasers have benefited from the equity loan, with over 80% of these being First Time Buyers, of all First Time Buyers nationwide during this time, almost 10% have used the scheme to get themselves onto the property ladder and this average is continuing to rise, reaching 15% of all First Time Buyers in the previous quarter.

Teresa May’s announcement confirmed that the Help to Buy scheme will be boosted by £1billion, which will allow for the number of houses on the scheme to double, with a forecast of 135,000 more homes to be purchased between now and 2021.

Of those who have taken up the Help to Buy scheme, between 40-50% could not have bought their home without it. Within Hart alone, 27% of all new homes sales have been backed by Help to Buy.

Help to Buy: Equity loan is only available on new builds and isn’t necessarily applicable to all, as each developer can choose whether to register for the scheme and apply it, so it is worth investigating before you set your heart on a new home. We do have a selection of new home developments that are currently offering Help to Buy, whilst some also offer further incentives such as stamp duty paid.

Providence House, Hook | Studio, 1 & 2 bedroom apartments (Stamp duty paid, this weekend only)

Blue Prior, Church Crookham | 2, 3 & 4 bedroom homes – only one 2 bedroom remaining

Church Meadows, Tongham | 3 bedroom homes

Pembroke Manor, Hook | 1, 2 & 3 bedroom apartments (Stamp duty paid, no legal fees, reduced deposits)

If you’ve been considering the options available to you, our advice would be to seek the insight and knowledge from an expert, we have a selection of trusted financial advisors who we work with on a day-to-day basis who are able to advise on the subject. They’ll also be able to advise on the best First Time Buyer mortgages available. You can also find more information on our website, here.

 

 

  • Source – Financial Times