Help to Buy Explained

Everything you need to know about Help to Buy

The UK Government created the scheme and it is run jointly by HM Treasury and the Ministry of Housing, Communities and Local Government. It was produced in 2013 as a way to give first time buyers a helping hand to get them on the property ladder. 

The scheme is delivered in partnership with the Homes and Communities Agency and UK Asset Resolution. The Help to Buy products are available through appointed Help to Buy agents and mortgage lenders who have signed up to the scheme.

There are 2 main elements to the Help to Buy scheme:

1.Shared Ownership - this is perfect for those people who can’t afford to buy 100% of their own home. This scheme enables people to buy a share of their home (between 25% and 75% of the home’s value) and pay rent on the remaining share and then they can buy bigger shares at a later date if they are financially able to do so.

The household does have to have a joint income of less than £80,000 to ensure you are eligible. With Help to Buy Shared Ownership you can buy a newly built home or an existing one through resale programmes from housing associations.

Shared Ownership also offers different options for those aged over 55 and people with long term disabilities.

2.Equity Loan – This is for those who are wanting to buy a newly built home with a maximum price tag of £600,000 in England, £400,000 in Scotland and £300,000 in Wales. As long as you have 5% cash deposit, the government will lend you 20% and then a mortgage would make up the remainder.

The key points about how the equty loan works:

  • You will need a minimum 5% deposit
  • It must be your only home
  • Only available on new-build properties
  • No household annual income limit
  • The Government will lend you up to 20% of the value of your property through an equity loan.
  • You will only need to secure up to a 75% mortgage – accessing more competitive lending rates
  • 100% home ownership

With regards to interest rates with the Help-to-Buy equity loan, you don’t pay any interest or fees for the first five years. In the sixth year, you would be charged 1.75%. This fee will increase each year by RPI plus 1%.

The initial deadline for Help to Buy was 2021 however this has now been extended to 2023 but is restricted to first-time buyers purchasing newly built homes. There may also be new regional price caps which could reduce the maximum value of homes that can be bought through the Equity Loan Scheme.
Want To Know More About Help To Buy?

Call Chartford Homes on 0113 237 2900 or email sales@chartfordhomes.com​