There are ways to buy
The current economic climate has meant that getting a mortgage is more difficult than it used to be, but there are still ways to buy your new home.
Help to Buy is a government backed initiative to help people buy a home. There are a range of options available through Help to Buy including:
- Help to Buy equity loans
- Help to Buy shared ownership
- Help to Buy mortgage guarantee (available across the UK)
Whether you are a first time buyer or moving home, there could be a scheme that’s right for you.
See our page “what is help to buy?” for more information.
Help to Buy ISA
If you’re a first time buyer, save up to £200 a month towards your first home with a Help to Buy ISA and the government will boost your savings by 25%.
That’s a £50 bonus for every £200 you save. You can receive a bonus of up to £3,000.
This means if you save £12,000, the government bonus will boost your total savings to £15,000.
The scheme was launched on 1 December 2015.
- new accounts are available for 4 years, but once you have opened an account there’s no limit on how you long you can save for
- accounts are available through banks and building societies
- you can make an initial deposit of £1,000 when you open the account – in addition to normal monthly savings
- there is no minimum monthly deposit – but you can save up to £200 a month
- accounts are limited to one per person rather than one per home – so those buying together can both receive a bonus only available to individuals who are 16 and over the bonus is available to first time buyers purchasing UK properties
- minimum bonus size of £400 per person
- maximum bonus size of £3,000 per person
- the bonus is available on home purchases of up to £450,000 in London and up to £250,000 outside London
- the bonus is paid when you buy your first home.
London Help to Buy
At the Autumn Spending Review in November 2015, the Chancellor announced that he would be creating a new scheme aimed at house buyers in London.
Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000.
Currently, if you’re able to pay at least 5% the value of your home as a deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%.
The scheme, which is based around the existing Help to Buy Equity Loan scheme, means that as long as you can afford the 5% deposit, people looking to buy a property in London will now be able to get a 40% equity loan from the government on new build properties valued at up to £600,000. That leaves only a 55% mortgage required to cover the rest.
But remember, if you accept a 40% London Help to Buy equity loan, then you are required to pay back a 40% share of the value of the home when you come to sell.
So to recap, with a London Help to Buy equity loan:
- you’ll need to contribute at least 5% of the property price as a deposit
- the government will give you a loan for up to 40% of the price
- you’ll need a mortgage of up to 55% to cover the rest
You can find out more information on the scheme at: www.helptobuy.gov.uk
A number of builders operate part exchange schemes, whereby the house builder will buy your existing home from you for the market value, allowing you to invest in a new home. The service aims to provide a quick and simple stress-free move by taking away the hassle involved in selling your own home. Part exchanging means there is no chain involved and the vendor has a guaranteed sale. It also cuts out estate agents’ fees. Contact developers operating in the areas where you want to buy to find out if they operate a part-ex scheme.
Many house builders offer some sort of shared equity scheme. These are schemes whereby, instead of paying 100% of the property price, buyers can pay up to 25% less while still owning 100% of their home. The builder ‘keeps’ the other share of the house, meaning the person buying only needs to get a mortgage of say 75% of the value of the home – meaning a smaller deposit and mortgage.
Of course, the low interest equity loan will need to be repaid, often when the house is sold or after a certain number of years, but it allows people to get a foot on the ladder. Look out for the best offers out there on the home builders’ websites.