MOVE FAST: The Help to Buy scheme has been running since 2013, but is now ending for good this October (Getty Photo)
By Levi Winchester
The government’s Help to Buy home equity loan program, which has been running for almost ten years, will end in March 2023. However, anyone who wants to participate in the program must apply by October 31, 2022. .
Designed to help prospective homeowners move up the property ladder, first-time buyers can use the program to borrow up to 20% of the price of a property (or 40% in London) through a government loan, without interest for the first five years.
The scheme was launched to allow potential buyers to climb the housing ladder and obtain lower interest rate mortgages, helping them stretch their budget. the mirror informs.
Since its debut in 2013, Help to Buy has enabled more than 225,000 homebuyers to take advantage of the home equity loan program, enabling many people to take their first steps up the housing ladder. But the scheme now closes for applications at 6pm on October 31, and Help to Buy ends on March 31, 2023.
So what is Help to Buy and what options are available to help buyers after the program ends?
What is Help to buy?
Help to buy is only available on new build properties and there are maximum property values set for different parts of England. For example, the maximum purchase price for a property in the North East of England is £186,100, rising to £600,000 if purchased in London.
This scheme can only be used to buy property in England, but a similar version is also available in Wales. Here’s a breakdown of regional price caps from highest to lowest:
South East: £437,600
East of England: £407,400
South West: £349,000
East Midlands: £261,900
West Midlands: £255,600
Yorkshire and the Humbers: £228,100
North West: £224,400
North East: £186,100
You will have to start paying the interest on the loan after five years, at a rate of 1.75%, so take this added cost into account in your repayments.
What to do when the help to buy ends?
There are other homeownership programs available if you need them:
SAIs for life
If you’re saving for your first home or retirement, the government will give you a free 25% cash boost if you open a Lifetime ISA (LISA).
Anyone between the ages of 18 and 39 is eligible to set up a Lifetime ISA, where they can save up to £4,000 a year and receive a government bonus of up to £1,000 each year. This can be used to purchase a home, up to a maximum price of £450,000.
The maximum bonus is £33,000 if you open it at 18 and max it out until you turn 50; cannot pay in a LISA after age 50. You will pay a fine and lose your bonus if you take money. from your LISA account for anything other than your first home or retirement.
Mortgage guarantee scheme
Here, the government shares part of the risks with the mortgage provider in the form of a 95% mortgage. Those using this scheme can make a 5% down payment, with the government stepping in to cover late payments.
Although the program is aimed at first-time buyers, it is not limited to them. Guarantor mortgages will be available to anyone buying a property costing up to £600,000, unless you are investing in buy-to-let or second homes.
In this scenario, you buy between 25% and 75% of a property’s value and pay rent on the remaining portion. Although it can be as low as 10% in some houses, the portion you can buy is usually between 25% and 75%.
Under a practice known as “echeloning,” in which you gradually increase the amount of property you own, you can purchase additional amounts. Although shared ownership is not only available to first-time buyers, to qualify, your individual annual income must not exceed £80,000, or £90,000 in London.
If you are shopping together as a couple, your combined income cannot exceed these limits.
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