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Help to Buy Scheme Ending

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What does the Help to Buy scheme ending mean for first-time buyers? Help to Buy was introduced in 2013 and has helped approximately 400,000 mostly first-time buyers get on to the property ladder. But the scheme is due to end on 31st March 2023 so if you’re planning to buy your first home then it’s time to get your skates on. Here’s what to consider.

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What can I buy via Help to Buy now?

The Help to Buy ISA closed to new applicants in 2019. You can continue to save in your ISA until November 2029 and claim the 25% government bonus by November 2030. Meanwhile, the new Help to Buy equity loan runs until March 2023, a shared equity scheme to help people get on the property ladder.

When is the Help to Buy equity loan ending?

Although the new Help to Buy equity loan runs until the 31st of March 2023, the deadline for new applications is on the 31st of October 2022. This deadline has been set to ensure first time buyers have enough time to complete their purchase and finalising conveyancing etc. When the scheme closes by the end of March 2023, homebuyers must have legally completed on their home.

How does the Help to Buy equity loan work?

The new equity loan scheme works in much the same way, running until March 2023. As with the previous scheme, the government will lend homebuyers up to 20% of the cost of a newly built home, and up to 40% in London. The shared ownership scheme is to carry on.

Do I need to get a move on?

Yes, if you want to take advantage of this government scheme, you may not have long. This new version will only last until March 2023. And the deadline for new applications is the end of October 2022. Remember you’ll need time to save up a deposit and apply for a mortgage, and find your first home to buy.

Saying that, there’s a good chance that the government may extend the equity scheme again in 2023, or introduce a replacement. But don’t bet on it.

On the one hand politicians are worried that the scheme is distorting the first-time buyer property market. But they are equally worried that ending it will prevent thousands of first-time buyers getting on to the property ladder in the future.

How do I qualify for the Help to Buy equity scheme?

Help to Buy buyers outside London must be able to fund both up to 80% (60% in the capital) of their home through a mortgage and the deposit, which must be at least 5% of the property’s purchase price. The government will lend you 20% of the purchase price (40% in London) for a new build. The maximum purchase price is £600,000 (in London) and it must be your only residence.

Other criteria states you must be:

  • aged 18 or older
  • a first-time buyer

You also cannot:

  • own a home or land anywhere in the world now or in the past
  • have had any form of sharia mortgage finance
  • own a home bought with other people or inherited
  • be married or in a co-habiting relationship, either now or on legal completion with anyone who owns or has owned a home or land anywhere in the world
  • buy a second home

What other options do I have as a first time buyer?

Is there any other help for first time buyers?

Help to Buy has been incredibly popular, and for good reason. Once it ends, it could be much harder for first time buyers to purchase a property. Here are some alternatives:

Shared ownership

This is a cross between renting and buying and enables you to buy up to 75% of a property’s value and then pay rent on the rest.

95% mortgage scheme

A new government-backed mortgage scheme will help buyers secure a mortgage with just a 5% deposit. This is a bid to help make home ownership a reality for many, but isn’t just limited to first-time buyers.

Get your parents or grandparents to chip in

This is a popular way to get on the property ladder by asking family members for help paying the deposit for a property. This is also known as the ‘bank of mum and dad’.

It’s essential to get the agreement set out in writing and ensure it’s clear to everyone whether it’s a long or short-term loan, or a gift. Also, agree when repayments will start, if applicable.

Buy with a friend

Buying with a friend can be a brilliant idea. You can combine your savings for the deposit and your joint income will boost how much money you can borrow with a mortgage. If you’re going to do it, find a good independent financial advisor to help you find a specialist mortgage.

The paperwork will also need to be more detailed. It must define the rules of the relationship including what happens if one person wants to sell up or buy the other out, how the running costs are shared, whether either of you can take in lodgers, and what happens if one of you dies.

Remember, there’s a lot to consider when it comes to first time buyers.

Save up a larger deposit

The bigger the deposit you save up, the more likely it is you will be accepted for a mortgage or offered one with a lower interest rate. The ideal scenario is to save up 25% of a property’s sale price, but 15% is good too. For a £200,000 flat a ‘larger deposit’ would be between £50,000 and £30,000, respectively. This can make it easier for you to get a mortgage guarantee, for example.

Buy in a less desirable area

House prices can vary by up to 25% if you look at two area within just a few miles of each other in many cities and towns. You may not impress your friends when you buy in a less desirable but cheaper area, but in the long run you’ll be the winner. Do your research carefully and pick areas to buy in with solid, good-quality housing stock, which are currently ‘unfashionable’.

Let us lend you a hand

Want to get to know an area? To arm yourself with the best information to help with every aspect of your first home purchase get Phil Spencer’s property report.

From stamp duty to mortgage repayments to legal fees, there’s a lot for hopeful homeowners to consider. This is why arming yourself with the knowledge you need is essential! Following a first time buyer checklist can help ensure you don’t miss anything important.

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Last Updated: January 6th, 2023