For aspirational first-time buyers, the Government’s Help to Buy Equity Loan scheme provides an attractive and helpful route onto the housing ladder. It’s no surprise that as many as 120,000 buyers have made use of the scheme since its launch in 2013.
Buyers of new build homes under £600,000 who may be struggling to save enough money to cover a mortgage deposit are able make use of Help to Buy reducing their deposit requirement to just 5%. So buyers with the ability to meet repayments on a mortgage of 75% of the property’s value can benefit from a 20% government loan which is interest free for five years.And for those buyers facing the even greater task of trying to buy property in London, the value of the equity loan can be up to 40% of the home’s value to make that first step on the housing ladder more attainable.
In practice, this means that if you have saved enough for a £30,000 deposit and are able to secure the required mortgage you could qualify for support to purchase a new build home with a purchase price of just under £600,000. If you were buying a secondhand home, and so not able to access the Help to Buy scheme, that same deposit at the average first-time buyers deposit rate of 16% would only buy £187,500. Imagine what even just part of this difference could mean in terms getting enough space to grow in your new home or buying in a location that is convenient for you.
Taking advantage of the scheme also allows buyers to reduce their monthly mortgage payments. For example, if you bought a property with a purchase price of £300,000 using the Help to Buy scheme, depending on your mortgage conditions, mortgage repayments may be around £870 a month while without Help to Buy and a 16% deposit you would be looking at around £1,000 a month. So a new build home with Help to Buy requires a smaller deposit and can help save hundreds of pounds per month.
With house building on the increase and huge numbers of brand new, high quality homes available from the thousands of house builders registered to offer Help to Buy, now is a great time to check out what’s available near you.