1 July 2016 by

Attention First Time Buyers – Ways to Help You Get On The Housing Ladder

Following the Brexit vote, there is a great deal of uncertainty in all markets regarding the implications. We will keep you updated on developments over the next few weeks. In the meantime, with the property market being immediately affected, here are some ways in which first time home buyers can receive financial help from the government.

Help to Buy Equity Loan

You may be eligible for a low interest loan towards your deposit, called an equity loan.

Eligibility

To qualify, the home you buy must:

  • Be a ‘new build’ house/flat
  • Have a purchase price of up to £600,000 in England
  • Be the only home you own
  • Not be sub-let or rented out after you buy it

How it works

  • You need to provide a 5% deposit
  • The government will lend you up to 20% (or up to 40% in London), up to a maximum of £120,000 outside London and £240,000 in London
  • You will need a mortgage of up to 75% for the rest (or up to 55% in London)
  • You must pay back the loan after 25 years or when you sell your home – whichever is earlier. The amount you pay back will depend on how much your home is worth (i.e. its market value) and will include interest and charges.

Help to Buy Mortgage Guarantee

This is a mortgage guarantee which allows you to buy a home with a 5% deposit, as opposed to the usual 10% deposit expected under the Standard Conditions of Sale. You should note that the guarantee is to the mortgage provider and not to you as the buyer. The scheme can be used for remortgaging also and is open to first time buyers and existing home owners.  The scheme will be open until 31 December 2016.

Eligibility

To qualify, the  home you buy must:

  • Have a purchase price of £600,000 or less
  • Be the only home you own
  • Not be rented out after you buy it
  • Not be bought through shared ownership, shared equity or any other publicly funded mortgage scheme
  • Be bought with a repayment (rather than an interest-only) mortgage
  • Be bought by you as an individual (and not through a company)

Help to Buy ISA

If you’re saving to buy your first home, the government will top up your savings by 25%, which means you could get up to an extra £3,000 – this being the maximum that the government will pay. If you are buying with someone else, they can also get a Help to Buy ISA as it is available to each first time buyer (and not just each household). The benefit is that you will not have to pay this back.

Eligibility

To qualify the home you buy must:

  • Have a purchase price of up to £250,000 or up to £450,000 in London
  • Be the only home you own
  • Be where you intend to live
  • Be purchased with a mortgage

How it works:

Your first payment into your ISA can be up to £1,200 and then you can pay up to £200 each month. When it comes to buying your property, nearer to completion, your solicitors would apply for the 25% bonus on your behalf. For example, if you save up to £4,000 in your Help to Buy ISA, the government will then grant you a further £1,000 which will not have to be repaid. You’ll be able to open a Help to Buy ISA until 30 November 2019. You have until the 1st December 2030 to claim your bonus.

Also, in order to claim the government bonus at the time of your purchase, you will need to have saved at least £1,600 into your Help to Buy ISA.

Which banks are involved?

To name a few…

  • Barclays
  • Halifax
  • HSBC
  • Lloyds
  • Nationwide
  • NatWest
  • Santander

If you would like to find out more information about help to buy government schemes, or other available schemes, and how you could benefit, please contact one of our solicitors in the Residential Property team here.

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