Buying a Home Using the new Help to Buy Scheme

Taking that first step on the property ladder hasn’t always been easy, but the current climate means it’s challenging. Undoubtedly, the government’s Help to Buy Equity Loan scheme has helped, and the latest Help to Buy 2021-2023 version is likely to offer first-time buyers much-needed hope.

Help to Buy Scheme – Eligibility

Under the new scheme, you must be a first-time buyer, and the house you are buying must be within the region’s price cap.

As long as you have a deposit of at least 5% of the purchase price, you can borrow 20% (40% in London) from the government via the Help to Buy scheme and arrange a mortgage for the remaining balance.

The government equity/top-up loan is interest-free for the first five years, with a small £1 monthly management fee.

You can buy the property with another person, but neither of you can already own a home, residential land or have any form of sharia mortgage finance. You may find this government guide useful.

Capped Prices Under the Help to Buy Scheme

Similar to the current arrangement, the new Help to Buy Equity Loan (2021-2023) provides a low-interest loan towards a deposit. Apart from restricting loans to first-time buyers, the new scheme also introduces regional price limits.

The caps sit at 1.5 times the average first-time buyer price for each region, hoping that this will reduce the amount that buyers need to borrow. In other words, how much you can spend on your home will depend on where you buy a house. For example, in the East Midlands, it’s capped at £261,000, whereas in the North East, it’s £186,100. You can’t use Help to Buy above this price.

Applying for the Help to Buy Scheme

The new scheme, launched last year, opened for applications in mid-December 2020. It will run until 31st March 2023. You will find out who your local agents are by clicking here. Remember, you will need to finance a reservation deposit (this will vary from builder to builder) and cover conveyancing costs, including several searches and a Land Registry fee.

Our Advice

If you need an idea of legal costs or further information or advice about the Help to Buy Equity Loan scheme, please contact us. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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