First-time buyer? Your dream home is closer than you think…
The new government Help to Buy scheme offers a fantastic opportunity for you to take those vital steps towards owning your dream new-build home - without a large deposit.
From 1st April 2021 to 2023, the Help to Buy equity loan scheme will be available to first-time buyers, with regional price limits on homes also due to take effect. First-time buyers can start applying for the new scheme now.
How does it work?
As long as you can raise a 5% deposit, the government will provide an equity loan of up to 20% of the property value. This rises to 40% in London. You’ll then have to qualify for a mortgage for the remaining amount.
Initially, the loan is interest-free for five years. In year six, the interest rises to 1.75% and rises again each year by the Consumer Price Index +2%.
How is the new scheme different?
There are two ways in which the new scheme will be different from the previous one:
- Firstly, it will only be available to first-time buyers.
- Secondly, there will be price caps in place across England, so the amount you can spend on your home will depend on which region the property is in.
Region
|
Price cap for Help to Buy homes April 2021 to March 2023
|
North East |
£186,100 |
North West |
£224,400 |
Yorkshire & the Humber |
£228,100 |
East Midlands |
£261,900 |
West Midlands |
£255,600 |
East of England |
£407,400 |
London |
£600,000 |
South East |
£437,600 |
South West |
£349,000 |
The scheme was initially launched to lend a helping hand to those aspiring to get on the property ladder. By lowering the amount needed for a deposit and reducing the amount buyers will need to borrow, it opens up a wider range of properties to first-time buyers.
Director of Help to Buy at Homes England, Will German, said: “Help to Buy has already helped more than 270,000 people into homeownership and 82% are first-time buyers. The new Help to Buy builds on this success, with first-time buyers at front of mind.
“We’re pleased we can help homebuyers with smaller deposits to own a home, at a time where there are fewer options open to them. Housing, like most sectors, has experienced a slowdown during the Covid-crisis. But Help to Buy continues to give homebuilders the confidence to keep on building at a more crucial time than ever.”
Table source: helptobuy.gov.uk