The government has announced that the new Help to Buy scheme in England is open to new applications this week from the 16th of December. It is set to run for two years from April 2021 until March 2023.
If you’re a first-time buyer struggling to save up for a deposit of more than 10% this may come as good news!
What is it?
As a way to help more people get on to the property ladder, the government launched a scheme in 2013 that meant buyers could buy a home with just a 5% deposit.
Almost 300,000 new homes were bought using the original scheme since its launch, and as it comes to an end the government has come up with a new, and similar, one to replace it.
To be eligible for the scheme and will need to prove you have enough savings to cover a 5% deposit. The Government will then provide 20% of the house price as a low interest loan (or up to 40% if you are in London). You will have to secure a mortgage to lend the remaining balance.
The Government loan is interest free for the first five years then a monthly interest fee of 1.75% will apply and will increase each year in April in line with the consumer price index (CPI), Plus 2%
Who is eligible for it?
The new scheme is only available if you meet all the following requirements:
• First time buyers. If you’re married or in a civil partnership you must not own or have previously owned any property or residential land in the UK or abroad.
• The property must be your only property and your permanent residence.
• You have the minimum deposit of 5% of the property’s purchase price, and that you are able to keep up with the monthly Equity Loan and Equity Loan repayments.
• You are purchasing a newly built home (you’ll have to make sure you’re buying the property off an approved developer who is registered with the scheme).
• The new build home you buy must be within the relevant regional price cap.
Is there a price cap?
The new price caps for each region is as follows:
• North East – £186.100
• North West – £224,400
• Yorkshire and 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
You can find more information on the Help to Buy England equity loan scheme here.
Note: This update is specific to the Help to Buy scheme in England. Scotland and Wales have similar options available, with Scotland having extended theirs to March 2022, and Wales to March 2022 – with the possibility of a further extension to March 2023, subject to government funding.