Help to Buy Scheme is offered by the government to help the first time home buyers get a home with just as little as 5% deposit.
How does Help Buy Scheme work?
This scheme backed by the government offers an equity loan where the first-time buyers and existing homeowners can borrow from the government to buy a newly-built home.
Under this scheme, the government provides you 20% of the purchase price with no interest for the first five years and the buyer only needs at least a deposit of 5%, with a 75% mortgage to make up the rest. And the price of the property should be not more than £600,000.
Help to Buy Scheme in London
In London, the government has increased the equity limit from 20% to 40% to reflect the higher property prices.
If you are in London, the government offers 40% of the purchase price and the buyer needs at least a 5% deposit, with a 55% mortgage to make up the rest.
If you wanted to buy a new build property worth £375,000, the Help to Buy Scheme in London equity load would break down as follows:
● £150,000 loan from the government
● £18,750 at least 5% deposit by the buyer
● £206,250 mortgage from a lender
The Help to Buy scheme is interest-free for the first five years and after that, the borrower pays an annual fee of 1.75% on the amount of the outstanding loan.
Who is eligible to avail this scheme?
Here are the general criteria are as follows:
● Must be at least 18 years old
● Must have at least 5% deposit of the purchase price of the property
● Help to Buy scheme is only for new build homes
● The property should not be more than £600,000
● The property cannot be sublet
● You cannot rent out your existing home and buy a second home through Help to Buy
Help to Buy Scheme 2021-2023
This scheme will end in April 2021. A new version of the Help to Buy Scheme will run from April 2021 to March 2023 that is only for first-time home buyers. And there will be a new price cap for the maximum value of homes that can be bought through this scheme depending on the region. In London, the price cap remains at £600,000.
Bluestone Properties is a real estate agency based in Tooting, London. If you are a first-time home buyer, we can guide you through the options available of Help to Buy scheme. Call us at 0208 355 3405 or contact us via our online form.