Help to Buy is a series of government schemes that help first-time buyers get on the property ladder. Some of these schemes are available across the UK, while others are specific to England, Scotland, and Wales.
There are many reasons why the Help to Buy scheme can benefit you. Over 435,000 homes have been purchased using a Help to Buy ISA and over 339,000 homes bought using the Help to Buy: Equity Loan. These schemes have helped many people purchase their first home.
Here are some of the main benefits of using a Help to Buy scheme:
Here are the Help to Buy schemes that you should know about:
The Help to Buy ISA is now closed to new applicants.
However, those who have a Help to Buy ISA can put £200 a month into their account until November 2029. You can then apply for a 25% bonus paid for by the government up to a maximum of £3,000. You can apply for your bonus until November 2030.
The property must be worth up to £450,000 in London or £250,000 elsewhere in the UK and must be where you intend to live.
Your solicitor or conveyancer will apply for the 25% bonus when the purchase has gone through.
The Forces Help to Buy scheme is for those in the armed forces. Servicemen and servicewomen are allowed to borrow up to 50% of their salary to purchase their first home. This amount is interest-free.
This scheme was first launched in April 2014 and is open for new applicants until 31st December 2022.
Those who use the Forces Help to Buy scheme must be purchasing their first home or another property on assignment.
You must meet the following criteria:
When you apply for the Forces Help to Buy, you can borrow up to 50% of your annual salary. This is up to a maximum of £25,000 which can then be put towards the deposits or other costs including the estate agent and solicitor fees.
You can apply for the loan online via the Joint Personnel Administration system. You can seek further advice on the application process via their Chain of Command or personnel agency.
The Help to Buy: Equity Loan will give you a government loan of up to 20% (40% if you’re buying in London) of the total cost of the house you’re buying.
You will have to pay a 5% (or more) house deposit and apply for a mortgage of 25% (or more) to pay for the rest of your newly-built home. For the first five years of owning your new-build home, the government will not charge interest on their 20% loan.
The Help to Buy: Equity Loan is available to first-time buyers who want to get on the property ladder and buy a home. The home must be a new-build property and sold by a registered homebuilder. The property must not have previously been lived in before and has to be the only home that you own.
To be eligible for the Help to Buy: Equity Loan, you must meet the following criteria:
There are maximum property purchase prices that your property must be under in order to qualify for the loan. The cap differs in each region, so make sure the property is within this limit. The maximum loan amount is 20% for all locations except London where the maximum loan amount is 40%.
Here are the regional property price caps:
|Region||Maximum Property Purchase Price|
|Yorkshire and the Humber||£228,100|
|East of England||£407,400|
To apply for a Help to Buy: Equity Loan, you will have to hire a Help to Buy solicitor. Your solicitor will be able to provide you with guidance and advice throughout to ensure that you are making the best decision.
They liaise with other solicitors and parties. They also conduct conveyancing searches and submit all legal documentation.
The Help to Buy: Equity is open to new applicants until 31 October 2022 in England and 31 March 2023 in Wales. The scheme is closed to new applicants in Scotland.
The Help to Buy: Equity Loan must be repaid after 25 years or earlier if you decide to sell your house. One of the advantages of the loan is that no interest is charged in the first 5 years of the loan. However, after this, you will have to pay a monthly interest fee of 1.75%.
In order to reduce your monthly payments following the first 5 years, you can choose to repay half or all of the loan within this time.
If you do decide to sell your house, you will pay back the percentage of the price you bought the house for. This means that if your house rises in value, the amount you owe will also increase. The amount you owe will decrease if your house has fallen in value. This is because you borrow a percentage of the property’s value rather than a fixed amount.
The Help to Buy: Shared Ownership scheme means that you can buy a share worth between 10% and 75% of the property purchase price. This is ideal for those who cannot afford to pay a full deposit or mortgage payments for their home. Over time, you may be able to buy additional shares of your home.
You will own a certain percentage of the property’s value and then pay rent to the landlord for the remaining share. Your landlord can either be a private landlord, a housing association, or a council. The higher your share, the less rent you will owe to the landlord. You will need to pay a minimum 5% deposit of the share that you are buying.
The property must be leasehold. This means you will need to pay monthly ground rent and service charges. These will contribute toward the maintenance of any communal areas.
To be eligible for the Home to Buy: Shared Ownership, you must:
When you undergo the Shared Ownership scheme, you will have to pay rent to your landlord. This rent will be determined by the share owned by the landlord and calculated accordingly. If your landlord owes a higher share of the property, you will owe more in rent compared to landlords who own a lower share of the property.
Landlords review the rent each year meaning that your rent can increase. However, there are limits to how much the landlord can increase the rent. The maximum rent limit is 3% of the landlord’s share per month.
The Home Ownership for People with Long-Term Disabilities is known as the (HOLD) Shared Ownership scheme. It has been designed to help those with long-term disabilities get on the property ladder. They will share ownership with a housing association or registered social landlord.
Applicants of the HOLD Shared Ownership can buy an initial share of a property between 10% and 75% of the market value. The owner then pays rent to the housing association or landlord that has been calculated on the share they do not own.
Like the Help to Buy: Shared Ownership scheme, you can buy additional shares later on if you wish.
There are requirements that applicants must adhere to before the application is approved. Here is the criteria:
To apply for the HOLD Shared Ownership, potential applicants should contact their local Help to Buy agent. The Help to Buy agent will then assist with filling out and submitting the forms.
The Older People's Shared Ownership is a scheme that has been designed for people aged 55 and over. Applicants can purchase a share between 10% and 75% of a property's market value and then pay rent on the rest.
This scheme is different from other Shared Ownership schemes as applicants can only purchase up to 75% of shares on the property. However, once someone owns 75%, they will not have to pay rent on the remaining amount.
Applicants must be aged 55 and over and meet the following requirements:
Annual household income must be less than £80,000 for those outside London or less than £90,000 for those in London
Either a first-time buyer, a previous homeowner who cannot afford to purchase a new property, or in an existing shared ownership and wanting to move
Those looking to apply for the Older People's Shared Ownership scheme should contact their local Help to Buy agent. The Help to Buy agent will help to fill out and submit the appropriate forms.
The Help to Buy Scotland Equity Loan is now closed. However, those looking to buy a house in Scotland can apply for the Low-Cost Initiative for First Time Buyers, also known as LIFT.
There are two LIFT schemes that you should know about. These are the Open Market Shared Equity (OMSE) Scheme and the New Supply Shared Equity (NSSE) Scheme.
The Open Market Shared Equity (OMSE) Scheme is available across Scotland. It is open to first-time buyers and those within priority access groups. These groups are:
To apply for the OMSE Scheme, you will need to contact the Link Homes administrating agent. When approved, you will receive a 'passport letter' that will tell you the maximum price that can be paid for a home.
The New Supply Shared Equity (NSSE) Scheme is available across Scotland. It is best for those wanting to purchase a new build from a local council or housing association. It is also open to first-time buyers and those in the priority access groups, which are the same as above.
To apply for the NSSE Scheme, you will need to contact your local council or registered social landlord. They will then help you to fill out the application. Your social landlord will need to find out information on your current income, what size mortgage you can afford, and what personal contribution you can make amongst more.
Lastly, the Help to Buy Wales Equity Loan scheme is available for those living in Wales. This scheme is similar to the Help to Buy: Equity Scheme, but the criteria is different from England. The Help to Buy in Wales is available until 31st March 2023.
Applicants must provide a 5% deposit of the property price. The maximum loan available is up 20% of the property purchase price. You will need to take out a mortgage to pay the remaining amount.
The Help to Buy Wales scheme is similar to the Help to Buy Equity Loan in terms of eligibility. The property must be purchased from a registered developer.
You must meet the following criteria:
To apply for the Help to Buy Wales Equity Loan, you will need to follow a procedure to ensure that you qualify for the scheme. Make sure that you seek advice and guidance from a conveyancer before making your final decision.
Here is how you need to apply for the Help to Buy Equity Loan in Wales:
When you have been approved and your loan has gone through, you will need to repay the full loan within 25 years. You can pay off your equity loan at any point within this time. Selling your house within this time is known as staircasing. If you do this, the remaining balance of your loan has to be at least 5% of the current market value. You are not allowed to staircase if you are in arrears with your monthly payments.
You will need to receive permission from Help to Buy (Wales) Ltd if you do decide to sell your home, make improvements or transfer ownership. You should complete the Post Sales Instruction Form.
You will have to instruct a valuer who is regulated by RICS to carry out a valuation to provide you with an accurate valuation.
If you have decided that the Help to Buy scheme is for you, then you need to make sure that you instruct a regulated conveyancer. At Compare My Move, we have a network of partners who are verified and regulated so you can have peace of mind. They will guide you through the process and provide you with advice each step of the way.