With the first time buyer schemes available in 2019, there couldn’t be a better time to invest in your first home. From the government Help to Buy scheme to shared ownership, there are a range of options available to help buyers take their first step onto the property ladder.
In this article we will look at two of the main house buying schemes available, and share all you need to know about buying a home using a scheme.
Help to Buy
The Help to Buy scheme
is a government-backed initiative that is helping people onto the property ladder for the first time. The scheme, which will run until 2020 with an extension to 2023 for first-time buyers
, enables you to buy your new home with just a 5% cash deposit and a 75% mortgage from a lender. The remaining 20% is taken as an Equity Loan from the government and is paid back anytime within 25 years or when you sell your home.
The Help to Buy Equity Loan has helped over 170,000 people buy a new home, with more than 80% of those using the scheme to buy their first home.
What are the Pros of the Help to Buy Scheme?
The Help to Buy scheme has plenty of pros when it comes to buying your first home.
- You only need 5% cash deposit to buy
- Applying for a 75% mortgage means you’re more likely to be accepted
- Low mortgage loan to value means you can access better interest rates and deals
- The Equity Loan is interest free for the first five years
- You can pay back the government funding anytime within 25 years or when you sell the property
- You can buy any new-build property up to the value of £600,000
How long is Help to Buy available for?
The initial Help to Buy: Equity Loan scheme as we know it, which can be used by both first time buyers and current homeowners looking to upsize, will run until 2020. However, there has been an extension announced by the government
which will see the Help to Buy scheme run until 2023 for first time buyers only. This extension will also come with property price caps which will be set per region.
How do I Apply for Help to Buy?
To apply for the Help to Buy scheme you’ll need to register with a Help to Buy Agent, which can be done through the home builder you have chosen to buy your new home with.
To be eligible to use Help to Buy you’ll need to meet the following criteria:
- Be buying a new-build home in England that is wort less than £600,000
- The new home must be the only property you will own (current buyers must prove they have sold their existing property before legal completion)
- Have at least 5% of the new home value as a cash deposit
- Be offered a mortgage in principal for at least 75% of the new home value
When you buy a new home with Strata, our panel of independent financial advisors can help you determine if Help to Buy is right for you, and register you with a Help to Buy Agent to make your application.
The heylo Home Reach scheme
is a part-buy-part-rent scheme, sometimes referred to as shared ownership, that can help first time buyers get on the property ladder sooner.
With Home Reach, you can buy between 50-75% of your new home now, and rent the remaining share at a small rental fee per month. You have the option to buy the remaining share at any time, or continue to rent the remaining share.
There are plenty of pros to buying a home using the Home Reach scheme including:
- You don’t need to keep moving and upsizing gradually, you can buy your forever home today
- Lower mortgage repayments
- Move into your new home now and own the remaining share when you’re ready
- Flexible share amounts from 50% to 75% can be bought
- If you decide to sell, you can advertise at the share price, increasing potential interested buyers
- You will enjoy the same journey and benefits as any other Strata homebuyer, including customising your new home with options and following the build progress, as well as a two year warranty and aftercare service
- Home Reach homes have a 125 year lease which is also a government lease
If you’d like to find out more about how buying options
including the Help to Buy and Home Reach schemes could help you to buy a new Strata home, find your nearest development
and come along for a chat with our team.