Changes to Help to Buy

LAURUS LIFE | Finance

Changes to Help to Buy

LAURUS LIFE | Finance

Everything you need to know

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Owning your home is still a dream that the vast majority of people have, but lots of us need help to achieve that. People born in 1990 are half as likely to be homeowners by the age of 30 than their parents, who were born in the 60s or 70s.

This is why the Government introduced schemes like Help to Buy and Shared Ownership, giving prospective buyers a hand getting onto the property ladder.

Help to Buy has been running since 2013 and has helped hundreds of thousands of people achieve that dream of getting their own home, but there have already been changes to how it works, and even bigger changes are coming next year.

Here’s everything you need to know.

Help to Buy explained

  

When Help to Buy was introduced, it came in two main forms; an ISA and equity loans. The ISAs were available from banks, credit unions and building societies and meant that the Government would add 25 percent to your savings - up to a maximum contribution of £3,000.

It was available for each first-time home purchaser, not each household, meaning that two people buying a home together could each benefit.

According to the Government, there were nearly 260,000 properties bought using the ISA, while 339,747 bonuses were paid through the scheme, while the biggest proportion was right here in the North West.

However, from the end of November last year no new applications for Help to Buy ISAs were being taken, though savers with existing accounts have until February 28, 2021 – extended from December due to the impact of Covid-19 on the housing market - to use their funds.

The Help to Buy equity loans are still available for all homeowners with a 5% deposit, offering them a 20% loan interest-free for the first five years, meaning they only need a mortgage for 75% of their property, without having had to save up a huge amount for the deposit. The current maximum home purchase across England is £600,000.

But big changes are coming from 2021, so here’s how they could affect you.

Help to Buy explained

  

When Help to Buy was introduced, it came in two main forms; an ISA and equity loans. The ISAs were available from banks, credit unions and building societies and meant that the Government would add 25 percent to your savings - up to a maximum contribution of £3,000.

It was available for each first-time home purchaser, not each household, meaning that two people buying a home together could each benefit.

According to the Government, there were nearly 260,000 properties bought using the ISA, while 339,747 bonuses were paid through the scheme, while the biggest proportion was right here in the North West.

However, from the end of November last year no new applications for Help to Buy ISAs were being taken, though savers with existing accounts have until February 28, 2021 – extended from December due to the impact of Covid-19 on the housing market - to use their funds.

The Help to Buy equity loans are still available for all homeowners with a 5% deposit, offering them a 20% loan interest-free for the first five years, meaning they only need a mortgage for 75% of their property, without having had to save up a huge amount for the deposit. The current maximum home purchase across England is £600,000.

But big changes are coming from 2021, so here’s how they could affect you.

How Help to Buy is changing

  

In the 2018 Budget, it was announced that Help to Buy was evolving, with the headline news being that the equity loans will be restricted to first-time buyers, meaning that existing homeowners can only benefit from it until next April.

Another major change is the introduction of regional property price caps that will restrict the value of the home you can buy. Here in the North West, the new price cap will be £224,400, a big drop from the previous £600,000 national cap.

The new scheme will run from April 2021 to March 2023 and, as with the current scheme, the Government will lend buyers up to 20% of the cost of a newly built home.

You won’t be charged interest on the loan for the first five years, and these will start at 1.75% and rise each year in April by the Consumer Prices Index including owner occupiers’ housing costs plus 2%.

When you sell the home, pay off your mortgage or reach the end of your loan term, but, you can repay all or 10% chunks of the loan any time before then.

Its great news for buyers that Help to Buy will continue until at least 2023, but currently, there are no indications that Help to Buy will be extended again and no sign that Help to Buy ISAs will be made available again.

How Help to Buy is changing

  

In the 2018 Budget, it was announced that Help to Buy was evolving, with the headline news being that the equity loans will be restricted to first-time buyers, meaning that existing homeowners can only benefit from it until next April.

Another major change is the introduction of regional property price caps that will restrict the value of the home you can buy. Here in the North West, the new price cap will be £224,400, a big drop from the previous £600,000 national cap.

The new scheme will run from April 2021 to March 2023 and, as with the current scheme, the Government will lend buyers up to 20% of the cost of a newly built home.

You won’t be charged interest on the loan for the first five years, and these will start at 1.75% and rise each year in April by the Consumer Prices Index including owner occupiers’ housing costs plus 2%.

When you sell the home, pay off your mortgage or reach the end of your loan term, but, you can repay all or 10% chunks of the loan any time before then.

Its great news for buyers that Help to Buy will continue until at least 2023, but currently, there are no indications that Help to Buy will be extended again and no sign that Help to Buy ISAs will be made available again.

What does this mean for you?

  

If you’re an existing homeowner or are looking for homes with a value of over £224,400, then the clock is already ticking on how long you can access the support of Help to Buy equity loans.

There’s also the potential savings available from the stamp duty holiday until the end of March, while if you act quickly you can also take advantage of our incredible offer to pay your mortgage for 12 months.

Shared Ownership is also still available and under this scheme, you can buy between 25% and 75% of the home and pay a subsidised monthly rent on the rest, which means for a £250,000 home, the deposit to buy could be as low as £6,250.

If you want to find out more about how you can benefit from Help to Buy or our offers, get in touch with our team today.

What does this mean for you?

  

If you’re an existing homeowner or are looking for homes with a value of over £224,400, then the clock is already ticking on how long you can access the support of Help to Buy equity loans.

There’s also the potential savings available from the stamp duty holiday until the end of March, while if you act quickly you can also take advantage of our incredible offer to pay your mortgage for 12 months.

Shared Ownership is also still available and under this scheme, you can buy between 25% and 75% of the home and pay a subsidised monthly rent on the rest, which means for a £250,000 home, the deposit to buy could be as low as £6,250.

If you want to find out more about how you can benefit from Help to Buy or our offers, get in touch with our team today.

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Copyright © 2019 Laurus Homes THT Developments Ltd.  Registered in England and Wales: no. 9201999