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The equity loan must be repaid after 25 years, or earlier if you sell your home. Applications for the Help to Buy equity loan will run until 31 October 2022 and home purchases must be complete by 31 March 2023. George Hammond and Nathan Brooker, 'England’s cladding crisis creates 2m ‘mortgage prisoners’', Financial Times .
The scheme was only available to new build homes, and regional price caps did apply. See the diagram above, or call one of our sales advisors for more information on how the Help to Buy scheme may differ in your area. You can only sell the property to someone who is eligible to buy a First Home. You must give them the same percentage discount that you got, based on the home’s market value at the time of sale. Contact the developer (or estate agent if you’re buying from a previous First Homes buyer) and tell them you want to buy a First Home.
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Freehold – where you own the land and the buildings on it outright. Estate facility charge – an annual fee for maintaining the wider estate on which a property is located, e.g. for upkeep of public areas. Conservation area – an area with extra planning controls to protect its special historic and architectural elements such as original windows or doors. Find out if these controls apply to your area by contacting your local planning authority.
Most people start their property search with online property sites or through local estate agents. The estate agent will help guide you through the buying process and work with other parties to help the sale progress. But remember - their primary role is to help the seller sell their property. If you want to eventually own a larger share in your home, you can ‘staircase’ by purchasing more equity, starting from a minimum value of 5%.
Making an offer
Up to 20% of the property market value is repayable, whether the value is less or more than the original full purchase price. You must repay the equity loan when you pay off your repayment mortgage, sell your home or reach the end of your equity loan term - whichever was the sooner. You needed to finance a minimum of 80% of the purchase price (this included a 5% deposit). The Help to Buy equity loan scheme has helped more than a quarter of a million people to buy a home. Since the start of the scheme on 1 April 2013, 272,852 property sales have been completed. The deadline for the legal completion of the sale will remain the same – 31 March 2021.
Fridays and the first and last days of the month are often very busy, so you may get better rates and availability if you try to avoid these times. This information can be used by criminals to quickly identify which property you are buying and other important details about you, which can then be used for fraudulent purposes. If there are any types of open discussions with others involved in the process on an open online forum. A survey is useful because it will advise you of minor maintenance and major works required on the property now and in the future.
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If it is a short period of time you may wish to find out why – for example, there may be an issue with noisy neighbours. Drawbacks – properties on busy roads, backing on to railway lines, or located some distance from shops and public transport routes are often cheaper. You should make sure you are happy to make any compromises before you buy. Proof of source of funds – including your last 3 months’ payslips; P60 form from your employer; tax return and other documents if you are self-employed. More information on the documents you need is available on the Money Advice Service website. Proof of address – driving licence, bank or credit card statement, utility bill .
You can pay off your equity loan in full any time before then or make part payments. Your first part repayment will need to be at least 10% of what your home is worth at that time. You can open a Lifetime ISA from the age of 18 but must be under 40 and you can save in your Lifetime ISA until you’re 50. The maximum that you can save in a Lifetime ISA is £4,000 a year and the government will add a 25% bonus to your savings up to a maximum of £1,000 a year. Homes England, the government’s housing accelerator, will work with those who had a reservation in place before 30 June to assess their situation and look to provide an extension where necessary. In which case, they will have until 31 May 2021 to legally complete.
Again, this allows first-time buyers to purchase a property with a five percent deposit on homes up to £600,000. The Help to Buy scheme was available to first-time buyers only, subject to eligibility, and was restricted by regional price caps. For the first five years, the Government’s share of the loan is completely interest-free. You need to pay your deposit at the same time as you exchange contracts with the developer. You can only sell the home to someone who is eligible to buy a First Home.
The asking price is just that – don’t be afraid to make a lower offer. The estate agent is legally obliged to pass on all offers and the seller is not obliged to accept any offer, regardless of how much it is. Buying a rented property with a sitting tenant, or buying with the purpose of renting the property out, may be an investment option; however it is beyond the scope of this guide. If you are thinking of taking this route you should seek expert advice, as there are legal, tax and mortgage implications to becoming a landlord. Many developers will ask you to exchange contracts and pay a deposit shortly after reserving the property. You should make sure your lender and legal representative are aware of the deadline and are able to meet it.
Make sure you read your survey report carefully and speak with your surveyor afterwards to ensure you understand what the problems are, how serious they are, and what the remedies might be. You may be advised to get a specialist to visit the property and carry out a further assessment; for example a boiler check or damp assessment. Remember – an Energy Performance Certificate is not the same thing as a home survey either.
If you sell your home, you’ll pay the equity loan percentage of the market value or agreed sale price if it’s higher. You can then borrow an equity loan to cover from 5% and up to 20% of the property purchase price of your newly built home. You must repay the same percentage of the proceeds of the sale as the initial equity loan.
In the sixth year, you’ll be charged interest at a rate of 1.75%. This will be applied to the equity loan amount you originally borrowed . This annual interest is spread over the year in monthly payments.
There’s also a ‘maximum property purchase price’ limit for the home you buy depending on which region it’s in. You can buy a home up to and including the maximum property purchase price limit. There’s different guidance on how to apply for an equity loan in Wales. The equity loan percentage will reduce if any part repayments are made. Get all the up-to-date information on new homes, government buying schemes and initiatives, tips on moving home, saving and much, much more.
The property purchased using Help to Buy must be your only home and you must live in it. Our sales centres and showhomes are now open by appointment only. For example, if you purchased the home with a 30% discount, the maximum mortgage you could take out would be one worth 70% of the value.
You can check the former online by looking at ‘sold property price’ data, which will also tell you what price the seller paid for the property. However, new builds may be more expensive than a similar second-hand home – this is known as the ‘new-build premium’. Second-hand homes can provide more opportunities for improvements to tailor it to what you need and allow you to add value to the property. It is intended as a helpful overview of the process; it is not a definitive statement of the law and not all of the steps are mandatory for all cases. If you are thinking of buying a property, you should seek independent financial and legal advice.
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