24 November 2020

New changes to the Help to Buy scheme for 2021!

BREAKING NEWS! The UK Government has announced changes to the Help to Buy equity loan scheme. Out with the old and in with the new – If this is a scheme you are considering, here are a few things we think you should know;   The New Help to Buy scheme will take effect from […]

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BREAKING NEWS! The UK Government has announced changes to the Help to Buy equity loan scheme.

Out with the old and in with the new – If this is a scheme you are considering, here are a few things we think you should know;

 

  1. The New Help to Buy scheme will take effect from 01st April 2021 – 31st March 2023. If you are thinking of using the scheme before the changes come into effect, you must have completed the purchase by 31st March 2021. Given the Impact the pandemic has had on the property industry, the Government is allowing purchases that were reserved on or before 30th June 2020 to take advantage of the rules currently in play, hoping to avoid any extra complications for movers mid-purchase!

 

  1. How does it “help”? – The scheme will provide an equity loan up to 20% of the property value. If the house is in London however, this will be increased to 40%. For all buyers, your deposit will need to cover 5% of the property value and you will need to have a 25% repayment mortgage in place at completion.

 

  1. Payments? – For the first 5 years you will be charged a monthly admin fee of £1 with no interest. Once the 5 years is up, charges will be 1.75% from the time you took out the loan to the following April, at which point the interest will increase to the value of the Consumer Price Index (CPI) plus 2%. For example, if you purchase your property in January 2022, you will start to pay an interest of 1.75% from January 2027 – April 2027. Beyond April 2027 you will be charged CPI+2% interest.

 

  1. Am I eligible for the scheme? – To be eligible for the new scheme you must be a First Time Buyer. Unfortunately, the existing scheme allows home-movers to use their Help to Buy privileges on both their first and second properties, however, sadly this is not the case going forward.

 

  1. There are regional caps on the price of the properties you can use the scheme for. These price caps and further information on the new scheme can be found on the Help to Buy website, or the 2021-2023 guide.

 

As always, seek advice on your purchase from a qualified financial adviser or solicitor. They should be able to answer any questions you have about this scheme or others that may be available to you.