HELP TO BUY
We understand what it means to move into your own home. A place you can decorate and adapt to reflect your own style and taste.
However, fulfilling this dream isn’t easy. Owner-occupation rates have been declining for years and for some the reality of owning their own home seems beyond reach.
Looking to become a home owner?
Recent government initiatives have provided a welcome helping hand. From first-time buyers to families who need more room to grow, hundreds of thousands of households have already benefited.
Getting a clear picture of the opportunities that are available is important if you want to secure a place to call home. We offer advice, guidance and support on the different initiatives open to you, and we’re always happy to discuss ways to make your wish become a reality. You could be moving into a Charworth Home of your very own.
The government’s Help to Buy scheme includes a number of different components to help you take that essential step. Here’s our guide to what’s out there:
1. Help to Buy: Shared Ownership
If covering a full mortgage is prohibitive, then this programme could be for you. Shared Ownership offers the opportunity to purchase a share of your home and pay rent on the rest. Over time you can buy a larger share when your finances allow. This means you’ll only need to secure a mortgage against a percentage of the purchase price rather than the full amount.
New homes, as well as existing ones, are included in the programme and are available through housing associations. The initiative is open to non-homeowners but not restricted to first-time buyers, so if you’ve previously owned a property it’s not a problem.
If your household earns £80,000 a year or less (£90,000 in London) then you could be eligible for the scheme. You can purchase between 25% and 75% of the market value, however you will need to save a 10% deposit on this amount and be able to cover solicitors’ fees, stamp duty and other costs associated with buying a house.
The share that belongs to the housing association is rented to you at a reduced rate but may include a service charge. Whether you buy a house or an apartment, all properties are purchased on a leasehold basis. For more information on how to apply in our region visit the Help to Buy Midlands website.
2. Help to Buy: Equity Loan
In this scheme, the government will lend you up to 20% of the current market value of the house you want to buy, which means you need a 5% deposit and 75% mortgage. The good news is the loan doesn’t accrue any interest over the first five years. The scheme is applicable to newly built homes, which means you could be the owner of a pristine new property without breaking the bank.
An equity loan enables you to purchase a newly built home in England or Wales with a price tag of up to £600,000. The deadline for applications is March 2021, however a revised version of the scheme will continue after this point but only for first-time buyers and will include regional price caps.
For now, the initiative helps first-time buyers and homeowners looking to make that all important next move. There are some important restrictions to be aware of, for example, you won’t be able to sublet the property or use it in a part exchange deal.
With an equity loan, you’re in a better position to negotiate with your mortgage lender as rates will be based on a deposit of 25% rather than just 5%. Remember, you will be charged interest after five years, so be prepared to meet these costs when the time comes. Early repayment is possible but has to be at least 10% of the current market value of your home.
3. Help to Buy ISA
Saving for a home is one of the most important and positive steps you can take, but we understand how long and arduous this can be! The Help to Buy ISA is another tool to boost your pennies and get you into your own home in a shorter timeframe.
The Help to Buy ISA is a savings account for first-time buyers which includes a bonus of up to 25% from the government to reward good savers. For every £200 you put aside, the government will give you £50, up to a maximum of £3,000.
Shop around for banks and building societies that provide this product. ISAs are open to individual savers, which means couples could receive a £6,000 combined bonus. The minimum amount you need to save to receive a bonus is £1,600, which equates to a £400 top-up payment. The money is only supplied on completion of the purchase of a house.
The Help to Buy ISA must replace any other active ISAs you may have. If you’ve opened an ISA in the past but haven’t used it since 5th April, you can start to save with a Help to Buy ISA straight away.
For more information on how to apply visit the government’s Help to Buy website, and remember we’re always happy to help buyers secure the Charworth Home of their dreams with ongoing support and advice.