The exponential rise in house prices means it can be hard for first-time buyers to find a foothold on the property ladder. If this situation sounds familiar to you, don’t fret, because there are many Help to Buy schemes available that make it easier for you to purchase, or save for your first home. When it comes to finances, however, the choices can be overwhelming. This month, Barnes of Lincoln are offering a helping hand in the form of this simple guide to Help to Buy schemes.
Equity Loan Scheme – new build properties
The Equity Loan Scheme is a popular scheme for those who are wanting to buy property in the near future and it is a fantastic way to get a grip of the financial side of house buying.
It is available to first time buyers and homeowners and is popular for its low deposit requirement, at just 5%. A further 20% can be borrowed from the government to cover costs, which leaves you with a mortgage of 75% of the home’s value. Furthermore, you do not pay a penny on the 20% loan for your first five years living in the property.
This scheme is far quicker than saving for a large deposit to buy a house with, but a few rules and regulations apply.
- The loan is applicable to new builds in England with value up to £600,000
- You must occupy the property once secured and it must be your only property
- You are entitled to sell the house at anytime, but will have to pay back the 20% loan at 20% of the current sales price, which could be considerably more than when you purchased the property.
Equity Loan Scheme – Scotland and Wales
There are Equity Loan Schemes for both Scotland and Wales, but the rules and regulations differ from the English scheme. For the Welsh scheme, the benefits are the same. What is different is the value of the properties it applies to. In Wales, the scheme is applicable to homes worth £300,000 and under.
The Scottish scheme is different still. The scheme is known as the ‘Help to Buy Small Developers Scheme’, or the ‘Scottish Equity Loan’. Instead of loaning the money to buyers, the Scottish government will take an equity stake in the property of 10-20%. Also, the scheme only applies to homes worth £250,000 and under. You can buy out the stake which the Scottish government own of course, but this will be based on the value of the property at the time of repayment.
Shared Ownership scheme – new and preowned homes
Shared Ownership, also known as Shared Equity, is a smart option for those who cannot afford to pay a mortgage on an entire property. This part buy/part rent scheme means that the buyer purchases part of a property and pays rent for the rest. Over time the buyer will have the opportunity to purchase the property piecemeal, in a process known as ‘staircasing’. The minimum mortgage is typically around 25% of the property value and rent is paid on the remaining 75%. Moreover, this scheme is only open to first time buyers.
Saving Schemes
If you are looking to buy a home in a few years time, the Help to Buy ISA from the government could be exactly what you have been looking for. As part of this scheme you will be allowed to add £200 a month to a savings account, to which the government will add a further £50. They will continue to do this to the value of £3000. It will take 4 years to save the money in this way.
However, if you withdraw the money before the four year period, you will not be entitled to the government bonus. But if you are not going to buy before this period is over, you could come out with an extra £3000 towards your deposit, which is no small sum.
Whenever you decide to purchase a new home, it is a big decision that must be thought over thoroughly. Do your research and it could be the best move you ever make, so it is worth taking your time. For further clarification about Help to Buy schemes, be sure to check out the government website, for their overview.
Barnes of Lincoln have a near-century of experience in the removals industry, and our company have made it this far on shared family values of fantastic customer service, backed by moving days that are made easy for every customer. We are a comprehensive service provider, meaning we provide quotes free of charge; we will pack, prepare and transport your belongings; then help with the moving-in at the other end. Moving abroad? That’s no sweat either. We offer an international moving package that is equally good value as our UK moves. Contact our team today, to discover what we can do for you.
