House moving can be a complicated and drawn out process, especially when there are added things to get your head around, such as a Help to Buy loan.
While it’s certainly something that has helped many people get a mortgage and at a better rate than they would have in the past, the government scheme has left many wondering where they stand with regard to the changes that are afoot.
So, here at Readings, we thought we’d get to the bottom of things and create a guide which has the Help to Buy scheme changes explained for Leicester homeowners.
What Is The Help To Buy Scheme?
To start with, if you’re new to it all, you might be wondering what is the Help to Buy scheme? Well, in short, it’s a government initiative which aimed to give people more scope on the property ladder. It was launched on April 1, 2013 and the main part is an Equity Loan scheme for first-time buyers and people moving house, but it’s only available on new-build homes.
The buyer must have a deposit available of at least 5% of the value of the house they wish to buy and then the government pays 20% of the value through the Homes and Communities Agency (HCA). Not only does this leave homebuyers with a better chance of a more affordable mortgage rate (due to borrowing at a lower “loan to value” (LTV) ratio, but the government loan comes interest free for the first five years too. After that the interest rate begins, but it’s still pretty low.
This part of the Help to Buy scheme only applies to properties worth up to £600,000 and the property must be lived in by the buyer – so they can’t buy the property on a Buy to Let basis.
The other part of the Help to Buy scheme is the Mortgage Guarantee element which was officially unveiled on October 8, 2013. It’s this that is scheduled to end on December 31, 2016. It is very similar to the Equity Loan scheme, but is available for pre-existing homes and means that as long as a buyer has a 5% deposit, the government will guarantee another 15% with the mortgage company – an arrangement which will hopefully lead to a lower rate of interest for the buyer, for the same reason regarding the LTV mentioned above.
The changes surround the Mortgage Guarantee scheme which is due to finish at the end of this year. So, if this was something that you had your eye on, then it might be time to start looking at the other options. The Equity Loan scheme (the other part of the Help to Buy that we mentioned), will be available until 2020, but bear in mind that this is only for new builds. Other than that, there are some alternative options available to you.
There is the Welsh equity loan scheme which is available on new builds up to the value of £300,000. And the Scottish version which is for new builds up to £250,000, with the same minimum deposit of 5% as the English, however the Scottish Government will add an equity stake of 10-20% depending on eligibility.
There is also a Help to Buy government ISA scheme where you can add up to £200 a month into the account, which will be matched with £50 by the government up to £3,000.
Looking for a house to buy in Leicester?
As you can see, changes are afoot with the property market and the possibilities available for people looking to buy their first home or move house and it certainly pays to be aware of what these changes are and what they mean for you.
If you’re looking for a house to buy in Leicestershire, then there are plenty of excellent new builds popping up all over the county at the minute, as well as pre-existing ones at some great prices.
Contact Readings Today
If you would like to find out more about some of the best houses on the market across Leicestershire at the moment, then you can get in touch with our friendly and experienced group of property experts today and start looking into what options could be available for your new home.