Key points for the new Help To Buy Scheme!

  • Jan 26th 2021

If you are thinking of applying for the new Help-To-Buy Scheme, here are a few key points to help you before you commit.

The new Help-To-Buy Scheme is set to replace the existing one in April this year, with applications already open from December 2020.

Unlike the previous Help-To-Buy scheme available to all buyers and all property types, the new scheme is exclusively available for first-time buyers only, who can only purchase a new-build property. Although applications are open for the new scheme, the new scheme won't take place until 1st April 2021 and is due to end in 2023.

The UK government introduced the Help-To-Buy scheme in 2013 in a bid to help more people get on the property ladder. The scheme has helped over 270,000 people purchase a property, with 82% being first-time buyers and two-thirds under the age of 34.

The new Help-To-Buy scheme will allow first-time property buyers in England to buy a new-build property with only a 5% deposit. The government will lend up to 20% of the property's value outside London and up to 40% in London on an interest-free basis for the first five years.

The remaining 75% will be raised through a mortgage from one of the many participating lenders. Although the loan is interest-free for the first five years, buyers participating will have to pay a monthly fee of £1 for the life of the equity loan.

After the five-year interest-free period, an initial rate of 1.75% will be charged, rising each year by inflation as measured by the Consumer Prices Index plus 2%. The loan is secured as a second charge against the home and does not have to be repaid in full until the buyer pays off their mortgage or they reach the end of their mortgage term.

Early repayments of the equity loan can be made, however, this has to be done in values of at least 10% at a time.

The new Help-To-Buy Scheme, introduces regional price limits, with firs-time buyers not able to purchase a new build property costing more than 1.5 times the average first-time buyer property price for that region.

The region price cap for Help to Buy 2021:

East Midlands: £261,900

West Midlands: £255,600

East of England: £407,400

London: £600,000

Southeast: £437,600

Southwest: £349,000

Northeast: £186,100

Northwest: £224,400

Yorkshire and The Humber: £228,100

If you are a first-time buyer and are looking to buy a house with the new Help-To-Buy Scheme, speak with one of our property experts today by calling us on 0116 266 9977.


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