Help to Buy Scheme for First Time Buyers
16 August 2013
Due to the recession, first time buyers are struggling to get onto the property ladder. The combination of tighter wages and rising house prices means that they are finding it difficult, if not impossible, to save up the required deposit for a mortgage. Even if they can, UK lenders are being more careful, and so not everyone who is in a position to buy their first home will be able to receive the financial support that they need.
The government has identified this as a serious problem, and so has created its Help to Buy scheme as a way of helping first time buyers get onto the property ladder.
Help to Buy Scheme
Usually, in order to secure a mortgage for their home, buyers need to be able to put down a 20% deposit. For many aspiring first time buyers, this is simply impossible, and is acting as an insurmountable barrier for people looking to get onto the property ladder.
With the Help to Buy scheme, first time buyers only need to have a 5% deposit, and can borrow 20% of the property’s purchase price from the Government. For the first 5 years, this loan is interest free, after which it becomes part of the mortgage to be repaid over a 25 year period along with the rest of the loan. The scheme was thought up by the Treasury to offer further support to first time buyers after the Bank of England gave lenders £80bn worth of funding to subsidise the offering of lower mortgage rates.
Result of the Help to Buy Scheme
The Help to Buy scheme has benefitted not only first time buyers, but also the house building market. 10,000 first time buyers have been able to reserve new build properties, which represents a rise of 27% on the figures from last year.
Who is eligible for the Help to Buy Scheme?
In order to be eligible, you have to be looking for a new build home in England (the scheme doesn’t currently cover Scotland or Wales) that is valued below £600,000. You must be a first time buyer, and you cannot be purchasing the property for buy-to-let purposes. You must have a good credit history, be taking out a mortgage with a qualified lender, and be buying a home from approved house builders who are participating in the scheme.
From January 2014, both first time buyers and existing homeowners may be able to use the Mortgage Guarantee scheme to get a guarantee on their mortgage for a previously owned or new build home valued up to £600,000.
Services for first time buyers from Allcott Associates
We provide homebuyers with a range of structural and surveying services, allowing them to get an in-depth appraisal of the home they are intending to buy. For more information on what we offer to homebuyers, use our contact page to get a structural or surveying quote today and further discuss your requirements.