Thursday, June 25, 2015

Could The ‘Help To Buy’ Scheme Help You To Get Onto The Property Ladder?

For many would-be first time buyers, their dreams of becoming a homeowner are smashed by the fact that they simply cannot afford to save up a sizeable deposit. The issue? Whilst many are in rental accommodation, almost all of their income each month goes on rent, bills and groceries, leaving very little spare to put aside for a deposit. 

With this in mind, many would-be homeowners give up at the first hurdle and fail to take the time to look into their options and look at ways in which they could, in fact, make their dreams become a reality. One such option is the governments Help To Buy scheme and in order to take a look at what this actually means for first time buyers, weve teamed up with Mortgageforce Worcester’s Andrew Craddock.

What Is The Help To Buy Scheme? 

In the schemes own words, "The Government has created the Help to Buy scheme to help hard-working people take steps to buy their own home. Whether they want to get onto the housing ladder or move up it, Help to Buy makes it possible to buy a new-build or existing home priced up to £600,000 with as little as a 5% deposit."

As such, its easy to see why this is such an attractive proposition for would-be home owners. Whilst previously, it was seen that a deposit of, at the very least 10% but more often 15% or 20% was needed by first time buyers to secure their first home, this is now possible with just 5%. 

This isnt everything, however, as the schemes equity loan will lend you 20% of the value of the house to top up your 5% deposit. As a result, youll only need to secure a mortgage for 75% of the property price, meaning lower initial monthly repayments, in theory an easier to secure mortgage or the potential to get a mortgage on a higher priced property. Theres no interest payable on the 20% loan from the government for the first five years.

Who Is Eligible?

The equity loans are only available to first time buyers, however the other criteria is that it must be a new-build property being purchased. Of course, with the number of houses being built at the moment, this offers fantastic opportunities and the option to own a brand new home as a first time buyer. The property must also be priced at less than £600,000.

All in all, the Help To Buy Scheme is a fantastic offering for first time buyers, giving them the opportunity to own their own home with a smaller deposit, whilst benefiting from lower monthly repayments and government backing.