New Help to Buy Scheme Opens for Applications this December

New Help to Buy Scheme Opens for Applications this December


It has been announced by the government, that the new Help to Buy Equity Loan scheme, which is due to begin in April 2021, will be open to new applications from Wednesday 16th December 2020.

This is great news for any first-time buyers struggling to save a deposit of 10% or more, especially now, when mortgages with a loan-to-value higher than 85% are hard to find.

The new scheme is set to run for two years, until March 2023, and will replace the existing scheme.

 

So, what is the Help to Buy Equity Loan scheme and who is it for?

With house prices gaining strength year after year throughout our region, it’s great if you’re already on the property ladder, but if you’ve yet to get your foot on that first step, prices continually rising can make it feel like an impossible dream to a first-time buyer.

The government first launched a scheme, back in 2013, as a way to help more first-time buyers get on the property ladder, making it possible for buyers to purchase a home with as little as a 5% deposit.

Since its launch seven years ago, close to 300,000 new homes were bought using the scheme. As the original scheme comes to an end, the government has simply replaced it with a new, but similar one.

The government will provide a low-interest loan of 20% of the property price (or up to 40% if you’re in London), and the mortgage provider will lend the remaining balance. However, you will need to prove you are eligible for the scheme and that you have saved enough to cover a 5% deposit.

For the first five years, the government loan will be interest free. After that, a monthly fee of 1.75% will apply, and will increase each year in April in line with the Consumer Price Index (CPI), plus 2%.

 

In order to qualify for the scheme you must meet all of the following requirements:

  • You are a First-Time Buyer. You, and your partner (whether married or in a civil partnership) must not currently own, or have ever owned property or residential land in the UK or abroad
  • You must purchase a new-build property from an approved developer who’s registered with the scheme
  • The property must be your only and permanent residence
  • You can provide proof of having a minimum deposit of 5% of the property’s purchase price and that you have the means to make the monthly mortgage and Equity Loan repayments

The government however, have introduced regional price caps, which limit the price of the property you are able to purchase. So, the maximum purchase price will depend whereabouts in England you are buying.

 

Help to Buy: Equity Loan Price Caps – April 2021 to March 2023:

Region

Maximum Property Price

North East

£186,100

North West

£224,400

Yorkshire and the Humber

£228,100

East Midlands

£261,900

West Midlands

£255,000

East of England

£407,400

London

£600,000

South East

£437,600

South West

£349,000

 

You can find more information on the Help to Buy England Equity Loan Scheme at: https://www.helptobuy.gov.uk/equity-loan/equity-loans/

 

Alternatively, why not call your local Arden Estates branch and ask to speak to a member of the HLC financial team, who can guide you through the options and process of purchasing your first home.