With house prices rising ever higher, getting on the property ladder is not an easy task nowadays. However, if you’re looking to buy your first home, the government’s Help to Buy initiatives can offer some welcome assistance. Here’s three examples of how Help to Buy could help you purchase your first new home.
Help to Buy: Equity Loan
The Help to Buy: Equity Loan is one of the most popular government initiatives and it’s easy to see why. After you put down 5% of the property price as a deposit, the government then loans you another 20%, which adds up to a 25% deposit you put down in total. With a 75% mortgage, you should also get more favourable terms from your mortgage lender. The equity loan is interest free for five years after which you pay 1.75% of the loans value for a year then 1.75% plus 1% after that. The equity loan is exclusively available on new build homes and the property must be worth less than £600,000. For more details about this initiative go to our Help to Buy page.
Help to Buy: ISA
Another way to get that deposit money is to open a Help to Buy: ISA. For every £200 that a first-time buyer puts into this independent savings account each month, the government adds an extra 25% (£50). The minimum government bonus is £400, so you need to save at least £1,600 before you start receiving the bonus.The maximum government bonus is £3,000; to earn that you need to have saved £12,000. Though you can continue the scheme for another two years, anything you save above the £12,000 threshold will not accrue any further bonus. The money saved can only be used towards the purchase of a home and the bonus will be paid as you’re just about to complete the house purchase. If you are buying with a partner who is also a first-time buyer, both of you can apply for a separate Help to Buy: ISA, giving you a potential £6,000 bonus towards a new home. For further details, take a look at our guide about Help to Buy: ISA.
Help to Buy: Shared Ownership
The government’s Help to Buy: Shared Ownership initiative is a part buy/part rent scheme suitable for those who can’t afford a large mortgage. It begins with you buying a share of a home, typically 25% to 75%, and you then rent the remaining share, usually from the local authority. Over time, you can buy up the remaining shares of the property (known as staircasing) until you own 100% of your home. As you buy shares, the more you own of the property and the less rent you pay. There are many new homes specifically built for Shared Ownership by housebuilders and local authorities. A great place to find out more about this scheme is our own dedicated Help to Buy page.
Hundreds of thousands of first-time buyers have already used Help to Buy to get on the property ladder. With new homes available in every part of the country, no matter what your circumstances, Help to Buy can make getting on the property ladder a whole lot easier.