The help scheme to buy which ends next week will It’s even harder for first-time buyers to buy a home, experts say.
The scheme was presented by the government in 2013 to allow first-time buyers to obtain a newly built property with just a 5 percent deposit.
Applicants can borrow 20 per cent of the purchase price (up to 40 per cent in London) interest-free for five years. however it is now coming to an end and the people have risen until Monday, October 31 to apply and until Friday, March 31, 2023 to complete your purchases.
This is yet another blow to first-time buyers struggling to purchase a property as mortgage rates rise and property supply continues to decline, especially since nothing appears to be in the works to replace it.
Nick Morrey, mortgage broker at Coreco, said: “People will find it more difficult to buy a property now Help to buy has come to an end.
“Government coffers are not full of money and there is currently nothing to replace Help to Buy in the foreseeable future.”
Despite helping many people gain a foothold on the housing ladder, there has been some criticism of Help to Buy.
Because the properties are new construction, they can quickly lose value, leaving many first-time buyers at a disadvantage when trying to sell their homes at the same time they have to pay the government.
A This year’s House of Lords report he also said the scheme has helped push prices higher than the loan was worth to buyers, adding that the subsidies “do not provide good value for money”.
Others have suggested that he has done little to address the problem of affordable housing.
But there are several alternatives.
What are the alternatives to help buying?
Although Help to Buy is coming to an end, there are other options available to first-time buyers.
One remaining alternative is shared ownership schemewhich gives people the opportunity to buy a part of a property and pay rent to the landlord for the rest.
Experts say that being able to buy an initial stock before building that stock over time could help.
However, critics say there are not enough of these properties, adding that between eight and 10 people are applying for each shared ownership property.
There is also the SAIs for life available, which continues to offer savers a boost to their deposit savings, which remains a significant challenge for first-time buyers.
First-time buyers can also benefit from the extended stamp duty reliefone of the few remaining items from the recent mini-budget, which will help those saving for a larger deposit.
Several companies also continue to offer home equity loans, in addition to the buyer’s 5 percent deposit and a regular mortgage, to help people move up the property ladder.
Morrey said: “These schemes work on the same principles as the Help to Buy program and are a good option. The problem is that some lenders are reluctant to accept people into these schemes as they are not backed by the government.”
David Hollingworth of L&C Mortgages added that there are still deals on offer for those with smaller deposits, though they will still have higher rates than those with larger deposits.
“The new build sector can often require a larger deposit, but more options are being developed, such as Unlock depositthat some lenders, including Nationwide, are using to allow 95 percent LTV loans on new construction properties.
“The First Homes scheme is still gaining traction, but it offers qualifying buyers the chance of a discounted purchase price on certain properties.”
There are also options that use the help of parents to lend at a higher LTV or even without any deposit, subject to additional security, such as savings provided by the parents.
Lenders like Generation Home are offering more flexible options to help first-time buyers buy with the help of friends and family, whether it’s helping with a deposit or borrowing more money.