Help to Buy scheme was launched by the government in 2013 to help home buyers get on the property ladder with only as little as 5% deposit.
The current scheme will end on 31 March 2021. But the application for the current Help to Buy scheme will end on 15 December 2020.
The enhanced Help to Buy Scheme will start on 1 April 2021 and the application for this scheme starts on 16 December 2020.
What does the Help to Buy Scheme (2021-2023) in London work?
The enhanced scheme is only restricted to first-time homebuyers. And the government lends money to first-time homebuyers to buy a newly-built home.
The purchase price must not exceed £600,000. Under this scheme, you can borrow 40% of the purchase price of the property with zero-interest for the first five years as long as you have at least 5% of the purchase price for the down payment. After 5 years, you have to pay the loaned amount and it will be charged with an interest fee of 1.75%. Then, after the 6th year, the fees will rise in line with the CPI. You also need to pay a management fee of £1 for the equity loan life.
Then, the remaining amount can be borrowed from a mortgage lender.
Who are eligible to apply for the Help to Buy Scheme?
● First-time home buyers
● The property will be owner-occupied
● The home that you want to buy must not exceed £600,000
● You do not own any other property
● Be able to afford the fee and the interest per month
● You do not have any form of sharia mortgage finance
After 25 years, the help to buy a loan must be paid off. And if you sell the property before then, you must repay it when you sell it.
Note: The changing house market can affect the property price when you sell it before the loan has been paid off.
Sample Help to Buy Scheme Breakdown
For example, Amy and Dave are eligible first-time homebuyers who want to buy a home for £450,000. They have to put down 5% of the purchase price which is £22,500. Then, they can borrow from the government 40% of the purchase price which is £40,000. And the remaining 55% (£240,500) shall be borrowed from the lender.
Note: There are only specific lenders for help to buy scheme.
How to Apply for the Help to Buy Scheme (2021-2023)?
1. There are registered homebuilders for Help to Buy homes. A reservation should be made for the home you want to purchase before applying for the equity loan.
2. You must consult mortgage lenders and Help to Buy agents to know if you are eligible and to help with the buying process.
Bluestone Properties is an estate agency based in Tooting, London. We cover South London and surrounding areas. If you need help with property management, lettings, buying a property, renting a property, and selling a property, please do not hesitate to contact us at 0208 355 3405 or email us at firstname.lastname@example.org