The government’s Help to Buy scheme aims to give more UK house buyers the key to a property.
It was introduced in response to rising house prices (and many would say falling wages) that make it increasingly difficult for groups such as first time buyers get on the property ladder.
Help to Buy comes in four different flavours to suit different circumstances.
But even though the folks at Westminster have tried to make the scheme as easy as possible, it can still seem quite confusing to people new to property.
Hopefully, this post will clear things up.
Help to Buy: ISA
This is the one for UK first-time buyers
It’s a savings top-up scheme that helps you by boosting your savings by 25%. For every £200 you save, the government will kindly give you £50 bonus and they won’t stop giving until they’ve shelled out £3,000. But you need to have saved at least £1,600 into your ISA before you can claim.
These ISAs are available from a range of banks, building societies and credit unions for each first time buyer, not each household. So you could get a government bonus of up to £6,000 towards your first home if two of you apply.
It’s not as simple as it sounds, though. Your solicitor or conveyencer will need to apply for the bonus when you’re close to buying, and they’ll receive the cash to put towards your costs; but can’t be used for their fees, the deposit due at exchange or that holiday in Barbados you’ve been dreaming of.
This lets you buy a share of your property
If you can’t quite afford the mortgage on 100% of a home, Help to Buy: Shared Ownership lets you buy between 25% and 75% and pay rent on the remaining chunk.
You can use this option if your household earns £80,000 a year (or £90,000 a year or less in London).
You can apply if you’re a first-time buyer, used to own a home and are struggling to buy now, or you’re an existing shared owner looking to move. It’s available on new build homes or ones being sold through housing associations.
There are also shared ownership schemes to make it easier for older people and those with disabilities to get into their own property.
Designed to unlock brand new homes in England
This is a good old fashioned loan with a twist: you won’t be charged any interest on the loan in the first five years of home ownership.
The government lends you up to 20% of the cost of your new build home. You just need to find a 5% cash deposit and a 75% mortgage to make up the rest.
London Help to Buy
This is for new homes in the capital
Basically the same as the scheme above, but the government will offer you a loan of up to 40% of the cost of your new build home. Because they’re nice like that and realise that without help, most mere mortals can only dream of owning property in London.
Who can apply for Help to Buy?
If you’re a first time buyer or own a home and want to move, you can apply for a Help to Buy equity loans or shared ownership.
You can’t use the above schemes to buy a second home or a property to rent out. Don’t even think about it.
What are the limits?
In England, both schemes apply to homes costing up to £600,000.
In Northern Ireland the mortgage guarantee scheme applies to homes costing up to £600,000. There is also a different equity loans scheme.
In Scotland the maximum threshold depends on the value of the property and when your application is completed. For example, for applications completed on or before 31 March 2017, the maximum purchase price can’t exceed £230,000.
In Wales, both schemes apply to homes costing up to £300,000.
How to apply
Your local Help to Buy agent can help you choose the right option for you. They can also approve your application and help you get things right.