How Help to Buy Scheme Works

10th June 2021 posted in PROPERTY NEWS

The Help To Buy scheme provides an equity loan, with the Government backing first-time buyers to purchase a newly built home. The home must be the buyers’ main residence, and the scheme cannot be used to purchase a second home, or a buy-to-let property.

The buyer must provide a deposit of at least 5% of the property purchase price. Buyers can then borrow 20% (or 40% for buyers in London) of the purchase price. This loan is available interest-free for five years. After five years, you’ll be charged 1.75%. After the sixth year this the interest on the equity loan will increase by the Consumer Price Index (CPI) plus 2%.

The equity loan is due to be repaid after 25 years, or earlier if the property is sold.

Also, there is a maximum purchase price for Help To Buy and this depends on the region of England you live in. With Hertfordshire classed as East of England, the maximum purchase price for Help To Buy purchases is £407,400.

As of early June 2021, Rightmove says the following about Baldock house prices:

Properties in Baldock had an overall average price of £355,020 over the last year.”

Therefore, the average price of property in the local area meets the local Help To Buy criteria.

Has Help To Buy Scheme been of benefit?

Now that you have an outline of how Help To Buy works, you might like to learn more about whether it has helped people buy property. Since the Help To Buy Equity Loan Scheme was launched in 2013, over 300,000 new-build properties have been purchased with assistance from the scheme.

The scheme provides a loan of up to 20% of the purchase price, while in London, a 40% contribution is on offer. The total number of purchased households from the scheme is 313,043; according to Help To Buy Statistics released in May 2021.

For the three months leading to December 2020, a total of 21,026 eligible transactions were completed. This is the highest quarterly annual total since records began. When compared to the same time-period in 2019, this figure is 40% higher.

The majority of home purchases made via the scheme were bought by first-time buyers. These buyers accounted for 257,520 purchases, which equates to 82% of the total purchases.

Housing secretary Robert Jenrick said: “Helping people get a foot on the housing ladder is central to the mission of this government. The figures show over 300,000 homes have been sold through our Help to Buy scheme which hugely benefits first time buyers. Alongside other measures such as the stamp duty cut and new mortgage guarantee scheme, Help to Buy will continue to help more and more people to have a home that is truly their own.”

Homes England Peter Freeman believes the scheme has been a success, saying; “With the original Help to Buy scheme, and the new scheme aimed specifically at first time buyers, we look forward to helping more people like Sam achieve their dream of home ownership.”

If you are looking to step on the property ladder, we are more than happy to help. At Country Properties, we are pleased to say we have assisted many buyers using the Help To Buy scheme, and we are here to assist you if you need us.

In line with Government guidelines, our Baldock Branch is open and our experienced team is working hard to support you.  To clients old and new, if you have any queries or need advice on property sales and lettings then please call 01462 895061 or 01462 742077, or you could email baldock@country-properties.co.uk  or ashwell@country-properties.co.uk.